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The impact of FDI

The impact of FDI - in 2009 with a slow recovery in 2010...

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1. Colossal MNEs wield considerable power in negotiating business arrangements with small governments; and in bargaining over the terms under which they’ll operate in a foreign jurisdiction, Top MNE executives often expect to deal directly with heads of state. 2. Not surprisingly, then, various groups in the host country (as well as in the home country) frequently pressure governments to adopt policies that regulate the activities of MNEs. 3. Growth in worldwide Foreign Direct Investment makes it likely that such Canada will monitor MNEs even more closely in the future. 4. The global economic crisis resulted in a significant drop in FDI in 2008, extending into 2009. The drop in corporate profits, shortage of financial resources, and instability in the global caused many traditional MNEs to stop and in some cases reverse their FDI decisions. (recent impact) 5. Pressure groups push to restrict the activities of MNEs at home and abroad. (evaluating) 6. Global FDI inflows were expected to fall from $1.7 trillion in 2008 to below $1.2 trillion
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Unformatted text preview: in 2009 with a slow recovery in 2010. The drop in FDI was initially more severe in the developed countries—25 percent compared to 2007—but FDI in the developing countries was expected to drop more significantly in 2009. (evaluating) 7. An interesting note is that outward FDI from China continued to rise in 2008 and 2009. (evaluating) 8. Prior to the global economic crisis, both developing and industrialized countries deregulated markets, privatized national enterprises, liberalized private ownership, and encouraged regional integration in an effort to create more favorable climates for foreign investment. (evaluating) 9. However, the crisis caused major changes in government/business relationships, as illustrated by the rise in government ownership in autos and banking in the United States. The U.S. government even pushed aggressively for a partnership between Italian automaker Fiat and U.S.-based Chrysler in order to save Chrysler, thus actively encouraging FDI....
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