The global pattern of foreign direct investment in the years 2000-2011 Essay

The global pattern of foreign direct investment in the years 2000-2011 - Essay Example Foreign Direct Investment (FDI) is perceived as one of the important measures of increasing economic globalization. As because of increasing globalization and international trade, transnational corporations (TNCs) are able to invest in different overseas projects and shift their operations to different regions of the world (Globerman, & Shapiro, 2003). It is important to understand and analyze the concept of the foreign direct investment as it is directly related with the globalization in the today’s world (Noorbakhsh, Paloni, & Youssef, 2001). Because of increasing globalization and international trade, more and more foreign investors are investing their money in different projects overseas. It is important to notice that overall foreign direct investment (FDI) increased to around $ 33 billion in the year 2008 as compared to $ 5 billion in the year 2000 (UNCTAD, 2010). However, there was sharp decline in global foreign direct investment (FDI) in the year 2009 to around $ 28 b illion. This was because of the global economic recession. Overall economic recession and downturn forced the transnational corporations (TNCs) to cut down their overall investments and expenditures which in turn negatively influenced the global foreign direct investment (FDI). Most of these foreign direct investments (FDI) are directed towards the developing countries and least developed countries. The multinational corporations (MNCs) and transnational corporations (TNCs) are looking forward to exploit the abundance of low priced resources of these developing and under developed countries and thus shift more operations in these countries. Therefore, foreign investment flows from the developed countries towards least developed countries (Chakrabarti, 2001). The third world and developing countries are enriched with the resource of foreign direct investment (FDI). In the year 2010, overall global foreign direct investment (FDI) almost remained constant and reflected only a growth of around 0.7 percent. However, in the same year the foreign direct investment (FDI) to the developing countries increased by around 10 percent. Foreign direct investment (FDI) is important in order to maintain consistent growth and development all over the world (Blonigen, 2005). This facilitates the process of transferring the resources and funds from more developed countries to developing countries. Investors from developed countries are able to take advantage of relatively cheaper and low cost labour and other resources in the third world countries; while at the same time the third world countries are able to gain from the foreign investment which helps them in improving the overall economic condition (Neuhaus, 2005). For this very reason, many third world and developing countries have come up with different methods and strategies for attracting more foreign direct investment (FDI). For example, trade free zones, special tariffs, and easy regulations for foreign investors. Owing t o the high importance of the topic and the strong relation of the topic with the globalization and overall global economic condition, in this report an attempt has been made to analyze and evaluate