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This paper starts with a prime question: how has FDI contributed to economic success of the Asian countries? FDI is a form of market entry that allows foreign companies to invest independently or acquire an existing company in a foreign country (Sinha and Sanchari 62). Over the years, FDI has undergone many developments. Most of these developments seek to establish effective ways of adapting to foreign countries. These developments have not only provided foreign companies with competitiveness, but they have also affected the economy of host countries. However, given the differences in environmental factors surrounding diverse countries, this study proposes a research that seeks to establish the extent to which the Asian countries have benefited from FDI from Western companies.
Aim and Objectives
The main aim of this proposal is to establish how FDI has influenced the economy of the Asian countries. To achieve this aim, this study will adopt the following objectives:
- To evaluate and criticize the academic literature on FDI
- To achieve a higher understanding and knowledge of the most critical factors affecting FDI in Asian countries
- To determine whether it is possible to generalize the benefits emanating from FDI between diverse countries in Asia
Traditionally, acquisition of direct benefits emanating from FDI has always been premised on neoclassical theories. These theories, according to Johnson and Turner (223), consider FDI as a capital flow from the rich economies to the poor economies. While capital flow is considered as the direct benefit emanating from FDI, the indirect benefits are normally based on acquisition of technological, improved skills, competitiveness, and market expansion (Jensen 32).
However, while some studies indicate that FDI helps improve economic growth of the host countries, others are opposed to this viewpoint. The presence of this gap within the literature necessitates a research that would help shed light on this issue. But according to Hutzschenreuter, Kleindienst, and Bieberstein (341), a country can only benefit from FDI when it meets a certain threshold in a number of areas. These areas include financial development, trade flows, infrastructure, and macro environmental factors.
To answer the research question, this study will adopt qualitative designs. The sampling of the secondary sources will be carried systematically, as this will ensure that the study acquires the right information concerning the relationship between FDI and GDP, as well as the relationship between FDI and income per capita of the sampled Asian countries.
In this regard, the study will adopt Financial Times, Asian Wall Street Journal, and Far East Economic Review, among other articles. In addition to this, the study will adopt academic journal and articles that will help establish the casual relationship between FDI and economic growth.
Limitation and Future Research
Since searching the correct data from secondary sources is time consuming, the study will only focus on benefits of FDI in the host countries without taking into account the factors that MNCs consider as they enter Asian countries through FDI. However, this will form the basis for future research.
- Week 1: Gathering information concerning economic conditions of diverse countries in Asia
- Week 2: Carrying out a critical analysis of FDI literature
- Week 3: Identifying the sources that will help answer the gaps within the literature
- Week 4: Comparing and analyzing data from the secondary sources
- Week 5: compiling the findings
- Week 6: Submitting the final paper
Hutzschenreuter, Thomas, Ingo Kleindienst, and Baris von Bieberstein. “When More Can Be Less: the Perceived Value of Additional FDI in the Same Host Country,” Multinational Business Review. 19.4 (2011): 332-356. Print.
Jensen, Nathan, Nation-states and the Multinational Corporation: A Political Economy of Foreign Direct Investment. Princeton, N.J: Princeton University Press, 2006. Print.
Johnson, Debra, and Colin Turner. International Business: Themes and Issues in the Modern Global Economy, London: Routledge, 2010. Print.
Sinha, Pradip and Sanchari Sinha. International Business Management, New Delphi: Excel Books India, 2009. Print.