1. Unit I

2. Definition A form of investment that gives controlling interest in a foreign company The ambiguity: FDI is good yet dangerous Home and host country influence on FDI

3. What MNEs have to offer MNEs Investments: Links to local cos. Increased productivity Improved efficiency Capital formation HR: Training Employment Managerial Skills Technology: R&D Industrial upgrading New capital equipment Trade: Export Expansion Lower cost import Environment: Access to clean technology Company wide standards

4. Stakeholders Tradeoff Companies must satisfy: Shareholders Employees Customers Society But trade off exists The philosophy, actions and goals of MNEs are thus unique matching the situation it is in..

5. Balance of Payment Effect of MNE FDI brings both capital inflow and capital outflow Thus net balance-of-payment effect is important B=(m-m1)+(x-x1)+(c-c1) B=balance of payment effect m=import displacement m1=import stimulus x=export stimulus x1=export reduction c=capital inflow for purpose other than x or m payment.. remittances c1=c=capital outflow for purpose other than x or m payment.. remittances

6. Growth and employment effects FDI by a company for: Fuller utilization of resources Immobility of capital and technology from one industry to another Move operations to low wage country: Horizontal and vertical FDI Host country advantage: Inflow of capital and technology Host country losses:...

7. MNE and ethical behavior Concept : Relativism: when in Rome do as Romans do.. and Normativism.. There are universal standards of behavior.. Cultural foundations: Walk in between fine lines of both of the above Negotiate between evils Respect cultural identity Overpower corruption Sustainability

8. http://www.indiainbusiness.nic.in/i nvestment/for_dir_investment.ht m FDI cap in India: 1 FDI ST_110412.pdf Page 8 and 9 FDI ban in India 1 FDI ST_110412.pdf Pg 9

9. Sector-wise distribution of FDI inflows During August 2012, top 10 Sectors attracting highest FDI inflows Were: Services Sector (19 per cent), Construction development: Townships, housing, built-up infrastructure(12 per cent), Telecommunications (7 per cent), Computer Software & Hardware (6 per cent), Drugs & Pharmaceuticals (5 per cent), Chemicals (other than Fertilizers) (5 per cent), Power (4 per cent), Automobile Industry (4 per cent), Metallurgical Industries (4 per cent), Petroleum & natural gas (3 per cent)

10. Country-wise distribution of FDI inflows Top 10 investing countries during August 2012 were: Mauritius (37 per cent), check: http://www.worldhunger.org/articles/10/editorials/sharife2.htm http://www.worldhunger.org/articles/10/editorials/sharife2.htm Singapore (10 per cent), U.K (10 per cent),Japan (7 per cent), U.S.A (6 per cent), Netherlands (4 per cent), Cyprus (4 per cent), Germany (3 per cent), France (2 per cent), U.A.E (1 per cent)

11. FDI in retail…