Bric difficulty of doing business bric brazil russia

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BRIC – Difficulty of doing business BRIC = Brazil, Russia, India, China Ease of Doing Business US India Brazil China Russia Ease of Doing Business (Rank in 183) 4 133 129 89 120 Ease of Starting a New Business (rank) 8 169 126 151 106 # of Procedures 16 13 16 14 9 Time (days) 6 30 120 37 30 Cost (% per capita income) 1 66 7 5 3 Minimum Capital (%of per capita income) 0 210 0 131 2
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Copyright    Dr. Tomasz Lenartowicz Patterns in FDI: Summary General growth in FDI (Flow & Stock) 10 times in last 10 years Changing philosophy Decreased regulation/increased treaties Incentives FDI inflows US still dominant; Japan low Shift from developed to developing nations Emerging Markets: BRIC FDI outflows U.S. dominant; Japan low – since 1991 U.S. more outflows than inflows Increasing investments in Asia (also by the Asians)
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Copyright    Dr. Tomasz Lenartowicz Slide 6-1 1) Why would the governments interfere in FDI? 2) Can governments attract / reject FDI? Governments and the FDI
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Copyright    Dr. Tomasz Lenartowicz     Country A ( home country ) Country B (host country) FDI and the Host Country (B) Which are the + and – Aspects of FDI for the Host Country? FDI Profits
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Copyright    Dr. Tomasz Lenartowicz FDI and the Host Country BENEFITS Resource - transfer Employment Balance-of-payment (BOP) Import substitution Source of export increase (more competitiveness) COSTS (DRAWBACKS) Adverse effects on the BOP Capital inflow followed by capital outflow + profits Production input importation Threat to national sovereignty and autonomy Loss of economic independence Currency excessive strength
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Copyright    Dr. Tomasz Lenartowicz     Country A ( home country ) Country B (host country) FDI and the Home Country (A) Which are the + and – Aspects of FDI for the Home Country? FDI Profits
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Copyright    Dr. Tomasz Lenartowicz FDI and the Home Country BENEFITS Repatriation of foreign earnings (BOP) Increased employment: exports of raw materials/ components / machinery Transfer of learning to home COSTS (DRAWBACKS) Economic: jobs, foreign exchange, technological advantages Military, security related Negative image from: environment protectors, labor associations (sweatshops )
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Copyright    Dr. Tomasz Lenartowicz Political Philosophies re. FDI Some countries are favorable, some are not 2 extreme points: Radical, Free Market Many points in between Radical Free Mkt Pragmatic Nationalism
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Copyright    Dr. Tomasz Lenartowicz The Radical View Extreme nationalists Suspicion/opposition to MNCs – often intense: Tool of capitalist or foreign domination Exploit host - benefit home Host dependent - lose sovereignty
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Copyright    Dr. Tomasz Lenartowicz Radical Policies Unfavorable to FDI Prevalent in: current/former communist countries Latin America in ‘60s, 70s highly nationalistic countries Radical regimes have expropriated MNCs and prohibited new FDI DECLINE Collapse of Communism Poor economic performance VS.
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  • Spring '12
  • Herst
  • Dr. Tomasz Lenartowicz

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