...Why is China investing in Africa? Evidence from the firm level By Wenjie Chen, David Dollar, and Heiwai Tang1 August 2015 Abstract China’s increased trade with and investment in Africa has boosted the continent’s growth rate but has also generated considerable controversy. In this paper we investigate China’s outward direct investment (ODI) in Africa using macro and micro data. The aggregate data on China’s ODI in African countries reveal that China’s share of the stock of foreign investment is small, though growing rapidly. China’s attraction to resource-rich countries is no different from Western investment. China’s ODI is uncorrelated with a measure of property rights and rule of law, whereas Western investment favors the better governance environments. As a result, Chinese investment in strong and weak governance environments is about the same, but its share of foreign investment is higher in the weak governance states. The micro data that we use is MOFCOM’s database on all Chinese firms investing in Africa between 1998 and 2012. We use key words in project descriptions to code the investments into 25 sectors. This database captures the small and medium private firms investing in Africa. Contrary to common perceptions, there are few projects in natural resource sectors. Most projects are in services, with a significant number in manufacturing as well. In our country-sector-level regressions based on firms’ transaction-level data, we find that Chinese ODI is profit-driven...
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...MGMT 611 Class 19 Henisz, Witold J., (2012) “Summary of Global Strategic Management Frameworks,” Ghemawat’s AAA and Varieties of Capitalism Ghemawat’s AAA Global Strategy examines the additional opportunities, challenges, and tradeoffs posed when a company crosses national borders Ghemawat contends that to create, capture, and sustain rents in international operations firms have three strategies they can deploy at the product level to respond to distance: 1. Adaptation – seeks to boost revenues and market share by maximizing a firm’s local relevance Requires local autonomy but must trade off the gains from such decentralization against the costs of excessive heterogeneity and local subgoals 2. Aggregation – attempts to deliver economies of scale by creating regional or sometimes global operations (standardizing the product or service offering and grouping together the development and production processes) Requires global coordination but must trade off the efficiency gains of standardization and scale or scope economies against costs of always being perceived as an outsider or cost minimizer 3. Arbitrage – the exploitation of differences between national or regional markets, often by locating separate parts of the supply chain in different places Requires flexibility and the management of a complex network of internal and external relationships for continuous learning, but must trade off benefits from such dynamism against costs of being perceived as fickle, rootless...
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...drivers of Turkey’s long-run prospects (World Bank, 2010). Turkey’s high degree of integration with the world economy, through both trade and financial channels, resulted in the country becoming vulnerable to the impact of the global recession, with the economy contracting by 4.7% in 2009. That being said, the economy has now recovered to pre-crisis levels with growth reaching 7% in 2010, shown to be a larger growth than almost all European counterparts. Despite the economic and political expansion in the last 10 years, Turkey’s battle with corruption, unemployment, income inequalities, and the Kurdish problem have been risk factors for any business that considers investing. According to corruption rankings, Turkey was ranked below South Africa, and tied for a spot with Cuba (Transparency International, 2010). Sociopolitical Structure Turkey is a parliamentary democracy with a free market economy. Since legal reforms instituted in 1926, Turkey's judicial system has been based on the Swiss Civil Code, the Italian Penal Code, and the Neuchâtel (Swiss) Code of Civil Procedure. The 1982 Constitution guarantees judicial independence, and prohibits any government agency or individual from interfering with the operations of the courts and judges (Country Studies, 2010). The presence and the systematic implementation of these laws create an open path for Foreign Direct Investments; the intellectual property rights are also in favor of the proprietor. Despite a volatile past that...
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...Table of Content Question 1 ……………….…………………………………………….. 5 Introduction …………….………………………………………….. 5 Pest Analysis table ….…………………………………………..…. 5 Factors of PEST………………..…………………………...……… 7 Table of Factors ………………………………….………………… 10 SWOT Analysis………………………………….…………………. 11 Conclusion …………………………………………………………. 12 Reference …………………………………………………………... 13 Question 2 (a) ……………….……………………………………….. 14 Introduction …………….………………………………………….. 14 Market Structure table …………………………………………..…. 14 Monopoly………………….………………………………...…...… 15 Perfect Competition……………………………....………………… 16 Oligopoly……..………………………………….…………………. 16 Conclusion …………………………………………………………. 17 Question 2 (b) ……………….……………………………………….. 18 Introduction …………….……….………………………………….. 18 Perfect competition …………………….………………………..…. 14 Monopolistic competition….………………………………...…...… 15 Long run ………….……………………………....………………… 16 Oligopoly……..………………………………….…………………. 20 Conclusion …………………………………………………………. 24 INTRODUCTION The local pineapple, cv Victoria, is the second horticultural produce after Anthurium, with the highest export volume. Indeed, since the early 80’s, the Mauritian pineapple has been permanently on the European market in spite of drought or cyclones. The export volume has increased from 10 t in mid 80’s to more than 600 t presently and the local variety, Victoria already earns a good...
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...An Overview on Multinational Corporations INTRODUCTION Multinational corporations (MNCs) are firms that engage in some form of international business. Their managers conduct international financial management which involves international investing and financing decisions that are intended to maximize the value of the MNC. Management is motivated to achieve a number of goals and objectives, some of which conflict with each other. However, the commonly accepted objective of an MNC is to maximize stockholder wealth on a global basis, as reflected by stock price. Managers of an MNC may make decisions that conflict with the firm’s goal to maximize shareholder wealth. This conflict of goals between firm’s managers and shareholders’ is often referred to as the agency problem. For the firm to achieve its goals, it needs to put in place mechanism for control of agency problem. MNCs are recognized as the main actors of e international business, international business financing and global economies. According to Goshen and Bartlett, MNC is a firm that has substantial direct investment in foreign countries that it actively manages.2 the value of their sales in host countries overpasses the value of trade (imports and exports) in today’s World economy. Multinational companies attracted scientific and public attention from the moment of their appearance, and especially from the beginning of their intensive growth (during the 1960s). There are many interesting and important issues...
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...countries suffer higher infant mortality—54 deaths per 1,000 live births in Bangladesh versus 3 per 1,000 in Singapore—and lower average life expectancies—fifty-nine years versus eighty years (U.S. Census Bureau 2000.) Another insidious way in which corruption kills is that it skews public spending away from operating budgets such as HEALTH CARE and toward capital budgets—military spending, for example, where bribes are easier to extract (Klitgaard 1988; Mauro 1996; Tanzi and Davoodi 1997). Corruption hurts investment in at least three ways. First, it increases the cost of doing business, which then raises the threshold revenues required for businesses to break even. Second, it causes producers, on the margin, to bribe officials rather than invest in cost-saving technology or new products. Third, if public funds end up in the pockets of government officials, taxes will be higher and public investment lower, hurting economic growth. There...
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...MERCK AND RIVER BLINDNESS 1. Think about the definition of stakeholders — any parties with a stake in the organization’s actions or performance. Who are the stakeholders in this situation? How many can you list? On what basis would you rank them in importance? People suffering from the disease or those who potentially may be infected – would directly benefit from the cure Merck employees at all levels – profitability and the economic health of the company affects current employees Merck shareholders – inability to profit from the drug might have a negative effect on shareholder’s value, but taking the stand on “doing the right thing” might have a favorable effect on company’s reputation and increase the value of the stock Various healthcare organizations – Merck is one of the leaders in the industry whose actions or inactions may affect the state of the industry as a whole One way to rank stakeholders in importance is by their level of benefit from the drug putting people suffering from the disease in the first place as they would benefit the most from the invent of the cure. Then, employees and shareholders would share the second place, provided that the company would most likely not be able to recover funds invested in the long and expensive process of developing the drug which in turn would affect company’s profitability. Finally, various healthcare organizations would rank third; the effect on them would depend on the level of their involvement in the process...
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...Venture Capital and Private Equity Contracting This page intentionally left blank Venture Capital and Private Equity Contracting An International Perspective Douglas J. Cumming Associate Professor and Ontario Research Chair, York University – Schulich School of Business, Toronto, Ontario, Canada Sofia A. Johan Senior Research Fellow, Tilburg Law and Economic Centre (TILEC), Tilburg, The Netherlands AMSTERDAM • BOSTON • HEIDELBERG • LONDON • NEW YORK • OXFORD PARIS • SAN DIEGO • SAN FRANCISCO • SINGAPORE • SYDNEY • TOKYO Academic Press is an imprint of Elsevier Academic Press is an imprint of Elsevier. 30 Corporate Drive, Suite 400, Burlington, MA 01803, USA 525 B Street, Suite 1900, San Diego, California 92101-4495, USA 84 Theobald’s Road, London WC1X 8RR, UK Copyright © 2009, Elsevier Inc. All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and retrieval system, without permission in writing from the publisher. Permissions may be sought directly from Elsevier's Science & Technology Rights Department in Oxford, UK: phone: ( 44) 1865 843830, fax: ( 44) 1865 853333, E-mail: permissions@elsevier.com. You may also complete your request online via the Elsevier homepage (http://elsevier.com), by selecting “Support & Contact” then “Copyright and Permission” and then “Obtaining Permissions.” Library of Congress Cataloging-in-Publication...
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...The authors are grateful for the helpful comments from William Allen, Tom Pugel, Myles Shaver, Jordan Siegel, and Changqi Wu. Perspectives on China's Outward Foreign Direct Investment Randall Morck Bernard Yeung Minyuan Zhao Abstract Recent economic data reveal that, at the infant stage, China’s outward foreign direct investment (FDI) is biased towards tax haven countries and South East Asian countries and are mostly conducted by State controlled enterprises with government sanctioned monopoly status. Further examination of China’s savings rate, corporate ownership structures, and bank dominated capital allocation suggests that, although a surge in China’s outward FDI might be economically sensible, the most active players have incentives to conduct excessive outward FDI while capital constraints limit players that most likely have value-creating FDI opportunities. We then discuss plausible firm-level justifications for China’s outward FDI flow, its importance, and promising avenues for further research. I. Introduction Barely thirty years ago, most would consider China a poor agricultural economy. In 2008 China is hosting the Olympics to signal its emergence as a major economic power. This phenomenal development appropriately draws international business scholars’ attention. One especially curious characteristic of China’s development path is a recent surge in its outward foreign direct investment (FDI). Successful and not-so-successful foreign acquisitions by companies...
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...Subsistence Economy: an economy in which production is mainly for personal consumption and the standard of living yields little more than basic necessities of life—food, shelter and clothing. (A subsistence economy is a non-monetary economy which relies on natural resources to provide for basic needs, through hunting, gathering, and subsistence agriculture. "Subsistence" means supporting oneself at a minimum level; in a subsistence economy, economic surplus is minimal and only used to trade for basic goods, and there is no industrialization.) Development：The process of improving the quality of all human lives and capabilities by raising people’s levels of living, self-esteem, and freedom. Developing countries: Countries of Asia, Africa, the Middle East, Latin America, eastern Europe, and the former Soviet Union, that are presently characterized by low levels of living and other development deficits. Used in the development literature as a synonym for less developed countries. Traditional economics: An approach to economics that emphasize utility, profit maximization, market efficiency, and determination of equilibrium. Political economy: The attempt to merge economic analysis with practical politics—to view economic activity in its political context. Development economics: The studies of how economies are transformed from stagnation to growth and from low-income to high-income status, and overcome problems of absolute poverty. More developed countries (MDCs):...
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...Crossing borders: MTC’s Journey through Africa 1) What are MTC’s key strengths and weaknesses? Some of MTC’s key strengths are its over 20 years of experience in the cellular business and the resulting strong brand recognition the company enjoys. MTC was the first mobile telecommunications company in the Middle East. The company quickly achieved expansion through the acquisition of several existing telecommunications companies in the region: MTC-Vodafone in Kuwait and Bahrain, Atheer in Iraq, FastLink in Jordan, MTC Touch in Lebanon, Mobitel in Sudan, and Celtel in Africa. The success of the Celtel brand in Africa, for example, “had bred an almost unique degree of loyalty in its customers.” The fact that all these brands became local icons in their own right motivated the company to push for expansion outside the regional arena and into a global market by uniting the group under a single brand. The company introduced “One network,” which was the world’s first borderless mobile phone network, and this specific service gave an edge to the company against its competitors. MTC’s weakness and biggest challenge is the level of competitiveness the company is faced with as it enters new markets. Having to transition from an almost hegemonic position (when everybody else was afraid to enter the African market and the company had a booming market all for itself), to a position where several big telecoms threatened to become industry leaders in the targeted regions. In order to...
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...Determining FDI Potential: Are National Policies and Incentives Sufficient? Foreign direct investment (FDI) is increasingly becoming a preferred form of capital flows to developing countries in recent years, as compared to other forms of capital flows. The reasons for this are not hard to seek. In the context of the gloom and despair of the heavy debt burden plaguing these countries, FDI promises to be the bright ray of hope for harnessing capital flows to the country’s economic development without the pangs of capital repayment with interest. In this context Feldstein and Razin (2000) and Sodka (forthcoming) note that the gains to host countries can take several other forms: • FDI allows transfer of capital and technology, which is not possible through financial investment in goods and services. • FDI also promotes competition in the domestic input market • Profits generated by FDI contribute to the corporate revenue in the host country • Operation of new ventures by FDI leads to employee learning in the host country who learn how to manage and operate the businesses. This contributes to human capital development of the host country. • Profits generated by FDI contribute to tax revenues in the host country FDI is different from other major types of external private capital flows in that it is motivated largely by the investor’s long-term prospects for making profits in production activities that they directly control. Foreign bank lending and...
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...countries and makes their interaction easier. The globalization of the world economy is reflected in many ways. The General Agreement on Tariffs and Trade (GATT) simulates free trade between countries which allows firms to trade more easily and move around the world. A result of this increased mobility is the increasingly large scope of money and capital markets and general regulations on Foreign Direct Investment (FDI). Globalization implies that there are forces that are global, objective and universal which restrict not only diversity, but also the scope for national governments’ policy formulations. An example of this, are the conditions of the IMF loan to the British Labour government in 1976 which led to a greater role for the private sector and forced the government to implement policies contrary to their manifesto. Additionally, a growing inter-independence through technology is bringing people together. People are better able to communicate with, understand, and learn from each other using technology as a standard tool. Globalization is characterized by challenges such as environmental degradation, over-population,...
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...political risk and economic development. The chapter examines the experiences of Latin American countries and Eastern European countries and addresses the question of what it takes to promote economic growth. A good discussion of property rights and their effects on economic growth can be based on the end-of-chapter problems. This discussion serves to introduce the topic of country risk analysis–the assessment of the potential risks and rewards associated with making investments and doing business in a country. This is a vital task for multinational firms and international banks, who must constantly assess the business environments of the countries they are already operating in as well as the ones they are considering investing in. Similarly, private and public investors alike are interested in determining...
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...GLOBAL PRIVATE EQUITY REPORT 2013 About Bain & Company’s Private Equity business Bain & Company is the leading consulting partner to the private equity (PE) industry and its stakeholders. Private equity consulting at Bain has grown 13-fold over the past 15 years and now represents about one-quarter of the firm’s global business. We maintain a global network of more than 400 experienced professionals serving PE clients. Our practice is more than three times larger than that of the next-largest consulting firm serving private equity funds. Bain’s work with PE spans fund types, including buyout, infrastructure, real estate, debt and hedge funds. We also work with many of the most prominent limited partners (LPs) to PE firms, including sovereign wealth funds, pension funds, financial institutions, endowments and family investment offices. We support our clients across a broad range of objectives: Deal generation: We help PE funds develop the right investment thesis and enhance deal flow, profiling industries, screening companies and devising a plan to approach targets. Due diligence: We help funds make better deal decisions by performing diligence, assessing performance improvement opportunities and providing a post-acquisition agenda. Immediate post-acquisition: We support the pursuit of rapid returns by developing a strategic blueprint for the acquired company, leading workshops that align management with strategic priorities and directing focused initiatives. Ongoing value addition:...
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