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Critical review of Foregn Direct Investments their effectiveness as an investment strategy and tool. The major aim will be to establish key learning points for fragile and post conflict countries. I will focus on my research on Zimbabwe and Sudan - Essay Example

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Critical review of Foregn Direct Investments their effectiveness as an investment strategy and tool. The major aim will be to establish key learning points for fragile and post conflict countries. I will focus on my research on Zimbabwe and Sudan

But, if the circumstances keep improving the level of confidence goes up which in turn results in an advantageous arrangement for the foreign contributor as well as the host country. The policies of liberalisation and facilitation adopted by countries around the world are aimed at attracting more investments from abroad and attaining better growth rates. Hartungi (2006), cautions that there are a number of developing countries with invitations to foreign institutional investors, but many such economies are characterized by weaker economic, legal, and political institutions, which often makes them vulnerable to high levels of corruption, insecurity, and conflict. The liberalization and facilitation policies adopted by the developing world are aimed at doing away with such a notion and attract more foreign investments. Quite often the transition economies find themselves in a difficult situation on issues like attracting FDI vis--vis the need to sustain or create domestic system.
There are some countries, particularly in the Asian subcontinent, which have been able to achieve substantial growth rates on account of renewed emphasis on liberalization policies and commitment to growth oriented policies. These countries have been able to invite MNCs and FIIs in many of their developmental projects, but on the other hand many countries like Afghanistan, Sudan, Zimbabwe, Iraq etc. have not been traditional attractive locations for the international community. Reasons like unstable or unfriendly governments, war-like situations, weaker market regulations, undue protectionism/ subsidies by the host country etc. are the factors responsible for not many FDI proposals getting through. This study is therefore being undertaken to assess the effectiveness of FDI as an investment strategy and how this proves beneficial for the countries and the international institutions.

Prevailing situation in some countries like Zimbabwe and Sudan is somewhat different as compared to some other hot destinations for FDI. There are international agencies which keep track of a number of factors for a country and continue to update regular inputs. These institutions in turn come up with suggestions and guidelines about the prevailing political, economic or socio-cultural circumstances in each country. The foreign institutional investors in turn analyse all such reports and then arrive at their final decision about the investment. For example the Economic Intelligence Unit (EIU) has stated in its outlook for 2010-2011 for Zimbabwe that, "Zimbabwe's power-sharing government will continue to struggle over the forecast period" (EIU, 2009)." This is certainly not an encouraging sign for the investors. In another such forecast for Sudan EIU states that, "Sudan faces significant political challenges, including elections in April 2010, tensions in Darfur and the diplomatic difficulties caused by the International Criminal Court's arrest warrant for the president, Omar al-Bashir" (EIU, 2009a). But it is worth emphasizing here that as compared to the situation in 2006-08, Zimbabwe has improved its ranking by about 30 places in the World Economic Forum's 'Global Competitiveness Report 2009-10' in terms of country's overall competitiveness ...Show more

Summary

Investments from abroad are used by governments of many countries as a way of mopping up funds for their developmental needs. This works to the advantage of the companies and organisations as well. As part of a long term strategy, the companies are on the lookout to get a foothold at a foreign location, so that gradually they can exploit the marketing potential of this new location…
Author : effertzanibal
Critical review of Foregn Direct Investments their effectiveness as an investment strategy and tool. The major aim will be to establish key learning points for fragile and post conflict countries. I will focus on my research on Zimbabwe and Sudan essay example
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