International Business: Global Value Chain - Essay Example

Many governments are developing national policies, which aim at attracting and facilitating foreign investment. The policy framework is an instrumental element in global investment and trade. However, governments are not adopting a blanket approach to this factor but reinforcing regulatory policies on foreign trade with a view of accommodating industry policies that favor competitive business practices. The strategies developed at the national level should not only favor international investment but also protect national business.

Largely, economic policies should focus on individual needs. At the same time, present investment trends favor regional trade as opposed to bilateral trade. Arguably, the bargain by regional blocks roots for common economic policies as opposed to the bilateral agreements that tend to favor individual countries. The developing countries are leading in foreign direct investment. This trend seems to suggest that new business openings are more in developing countries because of untapped business opportunities.

It is apparent from the World Investment Report 2013 that the global value chain has an impact on international and foreign direct investment. The developed and developing countries tend to project varied investment trends in the global economy (World Economic Forum 2013). Specifically, countries such as Japan and the United States have significant internal value chains and tend to rely less on global value chains. China, Germany, and the United Kingdom significantly depend on foreign trade. The foreign exports in these three countries contribute immensely to their economy.

A considerable population of these countries derives their income or wage from industries whose primary concern is to manufacture goods or products for export. Elsewhere, the composition of exports and positions in global value chains depend on the natural resources of various found in these countries. For instance, China is the hub for the manufacturing of nearly all electronic products. Favoring factors influencing investment in this country are the cheap labor and availability of raw materials. Since the quantity manufactured supersedes the quantity demanded nationally, hence the quantity is sent to the global market (Ma, Van Assche, and Hong 2009 pp 655).