1. How 2008 Global Economic Crises affected Foreign Direct Investments to Developed and Developing Countries?
Ayse Merve Özkalay
Fatma Güler
Hakan Günes

2. AIM
In this research, our aim is to understand how FDI inflows into developed and developing countries affected from 2008 Global and Economic Crisis.

3. OUTLINE
Definitions
Determinants of FDI
Affects of Crisis
Conclusion

4. Definition of FDI
Foreign direct investment is that investment, which is made to serve the business interests of the investor in a company, which is in a different nation distinct from the investor's country of origin.

5. Foreign Direct Investment (FDI)
A long-term investment by a company in one state (the “parent company”) to acquire assets located in another state’s economy.
Defines control as owning 10% or more of the ordinary shares or voting power of an incorporated firm, or its equivalent for an unincorporated
The parent company must retain control over its foreign affiliate for the purposes of the investment.
!!Differs from portfolio investments, such as stocks and bonds, because foreign investors have control over their investments.

6. Types of FDI
Greenfield investments; building new facilities or expansion of existing facilities
Mergers and Acquisitions; taking over an existing foreign firm, although some capacity building often takes place subsequently
Horizontal Integration which is operating in the same industry as the home industry
Vertical Integration which is concerned with industries related to the home industry through vertical integration.
Backward Vertical Integration
Forward Vertical Integration

7. Vertical Integration Backward Vertical Integration;
toward the source of raw materials, a parent company provides inputs for a local firms domestic production process.
Forward Vertical Integration;
toward the sale of the end product, a parent company sells the outputs of a local firms domestic production.

8. Objectives of FDI SALES EXPANSION OBJECTIVES
Overcome high transportation costs
Lack of domestic capacity
Trade restrictions
Lower production costs abroad.
RESOURCE ACQUISITION OBJECTIVES
Savings through vertical integration
Gain access to cheaper of different resources and knowledge
Gain govermental investment incentives.

9. Advantages of Foreign Direct Investment
Knowledge and technology transfer to domestic firms
Labor force productivity
Economic benefits for the local economy
Enhanced competition
Improved access for exports abroad
Financing external current account deficits
Encourages integration between trading partners.

10. Disadvantages of Foreign Direct Investment
Give rise to a potentially volatile balance of payment flows, resulting in currency fluctuations
Inefficiency when incentives produce benefits that outweigh the costs, but authorities fail to properly maximize the benefits and minimize the costs.
Ineffectiveness when FDI incentives fail to produce benefits to the host economy-when the budgetary costs of attracting FDI exceed the benefits.
Adverse effects on domestic firms
Opportunity costs

11. Literature Review Previous period FDI Inflation rate Interest rate
Growth rate
Trade (openness) rate (Cevis, Camurdan 2009)

12. Literature Review Policy variables Business variables
Market-related economic determinants
Resource-related economic determinants
Efficiency-related economic determinants (UNCTAD report 2002)

13. Literature Review FDI to supply for local market
FDI for cost-minimizing
Asset-seeking FDI
Macroeconomic indicators such as market size, growth rate, GDP per capita on FDI
Institutional variables such as low level of corruption, government stability, enforcement of contract law (Dumludag 2009)

14. FDI ( )
Source: UNCTAD

15. FDI in developing countries with and without China
Source: UNCTAD

16. FDI
Source:UNCTAD

17. FDI
Source : UNCTAD

18. FDI
Source: UNCTAD

19. FDI
Source:UNTAD

20. Worldwide FDI inflows with three different trajectories, 1990-2012 (Billions of dollars)

22. Merger and Acquisition

23. Sectoral Breakdown of Global FDI Stock
Source: UNCTAD

24. The Global FDI Inflows

26. Conclusion Nations with low levels of protests, Repressive Regimes,
Countries whom International Financial Institutions directs and attracts foreign direct investment
Take high level of FDI. (Shandra, Ross, London, 2003)