Essay on Multinational Finished

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Set out a clear summary of key changes relating to global foreign direct investment and international production in 2014 over the previous year. You should include an accurate description of salient trends in the data e.g. Greenfield investment and cross border M&A. (Word-guidance 750).

FDI by Geography

FDI Inflows

FDI inflows are the value of inward direct investment. Global inflows have had a 9% increase in 2013 which shows increase in economic activity throughout the world. Figure 1 shows that despite the dips in 2013, there will be a rise in FDI across all economies in the coming years. The predictable dominance of inflows was still prominent with Asia1, Latin America, Europe, North America and Africa2. There were declines in areas such as South America, but was heavily affected by the trade of one country3. Russia as one of the only single country, FDI rose by 57% and looks to be continuing. Figure 1.3 shows that most of the host economies managed to get through the year making FDI inflow increase, although most notably the UK dropped. Its important during a summery to analyses the key formation of regions in the world that could affect all FDI inflows. BRICS4 is one the fastest growers, each one of its members plays a big role in the global economy, looking forward the way the trend appears to be going they may be competing with the dominant G-20 and APEC.

FDI Outflows

Global FDI outflows rose by 5% to $1.41 trillion, up from $1.35 trillion in 2012. Figure 1.4 highlights a current trend that the developed FDI from developed economies is steady, whilst developing economies still feel they need to ‘catch up’. Europe was divided countries that struggled in 2012 most notably Italy, Spain and Netherlands had a sharp increase in an attempt to re-grow, in contrast to TNC’s in France, Germany and UK which declined. Significant growth was seen from the countries were there FDI was focused on cross-boarder M&A most notably China5 and the region of Russia.

FDI by Mode of Entry

There have been improvements on FDI, Greenfield projects increased by 9% and cross-boarder M&As increased by 5%. The trend of previous years in shown in the Fig 1.8, it shows that before the financial crisis of 2008, there was high point although after the crisis, understandably FDI projects took a dip while the global economy recovered, in the coming years it is expected to rise, with most TNC’s adopting the method of FDI Greenfield projects.

Developed Economies vs Developing/Transition economies

The table above shows the increase in activities from the previous years from developing/transition economies, FDI Greenfield projects is up 17% while Cross-Boarder M&A’s is up 73%. A key trend is the growth of developing economies and the decline of developed6 economies.

FDI by Sector and Industry

The table below shows the trend that through Primary, Manufacturing and Services industries, there were increases in value of FDI. Constant increase throughout all industries is something that has become apparent especially with the push from the developing and transition economies to essentially catch up with the developed. Trends in International Production

The common trend behind growth in international production was the push from the developing and transition economies through high economic growth and consumption. TNC’s are still going through a period of cash holding after the crisis notably in developed economies7, this may be for risk aversion from developed economies.

In terms of the industries, TNC’s in the oil and gas, telecommunications and utilities industries increased their expenditure. The other side of that was industries that declined after the crisis such as consumer goods and industrials, which are transport, aerospace and defence, electronic and electrical equipment.

Internationalisation trends of TNC’s differed in the way that there was more concentration on domestic growth in terms of assets, sales and
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