FDI Flows in EU Countries: The Role of Common Currency and Uncertainty

FDI Flows in EU Countries: The Role of Common Currency and Uncertainty Essay example
Finance & Accounting
Pages 33 (8283 words)
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Table of Contents Table of Contents 1 Section 1 2 Section 3 Methodology 20 3.1. The Schema 20 References: 35 Krugman, P 2012, ‘Revenge of the Optimum Currency’, Retrieved at www.nytimes.com. Accessed on 11 September 2012. 37 Section 1 1.1. Background of the Study Foreign Direct Investments (FDI) is one of the principal economic strategies that facilitate technology transfer, acquisition of management techniques and promotion of economic development (Yuan, Cheng and Wang 2010).


Since the introduction, of Euro as the common currency among country members of the European Union, hopes for closer economic integration and political cooperation are heightened within the European Union (Henning 2007). Having a common currency within the Euro zone, is a fundamental issue among country members (De Souza and Lochard 2006) not only because the Euro plays a pivotal role in international transactions, especially with countries who have pegged their denomination with the Euro, but more so because a common currency has a positive effect on trade (Micco et al. 2003). However, when it comes to the impact of the Euro vis-a-vis FDI within the EU, minimal studies have been conducted (De Souza and Lochard 2006). FDI contributes in the creation of economic stimulus that can propel economic growth and development. The European Commission (2009), in a study confirms that FDI has a direct and positive effect to investments, production and export as evidenced by continued increased in these sectors of the country. ...
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