Chapter Fifteen Foreign direct Investment 15 Chapter objective This chapter discusses various issues associated with foreign direct investments by MNCs, which play a key role in shaping the nature of the emerging global economy
INTERNATIONAL FINANCIAL MANAGEMENT EUN / RESNICK Second Edition 15 Chapter Fifteen Foreign Direct Investment Chapter Objective: This chapter discusses various issues associated with foreign direct investments by MNCs, which play a key role in shaping the nature of the emerging global economy
Chapter outline ● Global trends in fdi o Why Do Firms Invest Overseas o Cross-Border Acquisitions o Political risk and fdi McGraw-Hilylrwoin 15-1 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 15-1 Chapter Outline ⚫ Global Trends in FDI ⚫ Why Do Firms Invest Overseas? ⚫ Cross-Border Acquisitions ⚫ Political Risk and FDI
Global Trends in FDi o Foreign direct Investment often involves the establishment of production facilities abroad Greenfield Investment Involves building new facilities from the ground up e Cross-Border Acquisition a Involves the purchase of existing business McGraw-Hilylrwoin 15-2 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 15-2 Global Trends in FDI ⚫ Foreign Direct Investment often involves the establishment of production facilities abroad. ⚫ Greenfield Investment ◼ Involves building new facilities from the ground up. ⚫ Cross-Border Acquisition ◼ Involves the purchase of existing business
Global Trends in FDi e Several developed nations are the sources of fDI outlowS about 90% of total world-wide fdi comes from the developed world o Both developing and developed nations are the recipient of inflows of FDI McGraw-Hilylrwoin 15-3 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 15-3 Global Trends in FDI ⚫ Several developed nations are the sources of FDI outflows. ◼ About 90% of total world-wide FDI comes from the developed world. ⚫ Both developing and developed nations are the recipient of inflows of FDI
Average Annual FDI (in Billions) 120 100 口 Inflows 60 口 Outflows 0 ntdindmmn McGraw-Hilylrwoin 1544 Copyright@ 2001 by The McGraw-Hill Companies, Inc. All rights
McGraw-Hill/Irwin Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved. 15-4 Average Annual FDI (in Billions) 0 20 40 60 80 100 120 Australia Canada China France Germany Italy Japan Mexico Netherlands Spain Sweden Switzerland United Kingdom United States Inflows Outflows