Host country and Multinational Investments Essay Example

the power and influence they have based on the rank they occupy in the world market. Similarly, the competitive market has encouraged entrepreneurs to widen their scope and expand business all over the globe. This is primarily the reason why developing countries that serve as hosts countries do everything they can to attract more and more investors.In this age of technological advancement, various products proliferates the market. Industries compete to outdo one another and to ensure their respective companies’ success. The competition continues to heighten, bringing the focus outside the home country.

This means that companies tend to invest in other parts of the globe to widen their consumer reach. This aim of widening their market provides an avenue for host countries to show that they are the perfect venue for more investments.Host countries strengthen their image as investment-worthy by highlighting their available resources such as manpower and natural resources. Given these two vital factors for economic growth and sustainable development, investors are challenged and become increasingly interested in engaging in various investment areas made available by the host country. In today’s trend of market availability of almost anything from basic necessities to luxurious items, selling is not as easy as it used to be.

Various aspects need to be ascertained.This includes consumer want and needs, target market, pricing, competition and over-all image of the company. That is why it is necessary that the host country can provide the essentials of what the investors need. This includes availability of labor, transfer of technology and skills. III. Developing Countries and Multinational Investments: Different hosts Long before the recognized term of FDI, which stands for foreign direct

investment existed, there have been regional agreement among countries.

These regional agreements involve investment and trade.This so-called Global Economy began in the 1990s. These established the three "trade blocs" namely Europe as its hub. Americas, with U. S at the center and the East Asia as third, together with Japan and China as dominating countries.

Like South Africa, different countries strive to get their share of foreign direct investments (Hanson, 2000). More importantly, similar to South Africa, these countries do have existing impediments that hinder them from engaging in foreign direct investment, more so in presenting their country as a viable host (Lane, 2001).One example is Israel. As a country having a modern and technologically advanced way of living, Israel can very well be a very spot for investment (European Business Journal, 1998). However, it was not always like that in Israel.

They also had a transition period. This means that before Israel rise to the rank of one of the 21st century's most competitive nation, Israel also experienced economic down slope. It originally was a low-technology and heavy industry economy, something that did not stimulate interest of investors.One of the well-known companies in the field of investment is Shell. Also known as the “Royal Dutch” being owned by the group belonging in Netherlands and Great Britain. Shell, as a multinational company own majority of the oil companies around the world, and in less developed countries.

This includes Nigeria, South Africa, etc. This advantage experienced by Shell is due to the fact that it provides less developed countries much of the income they need, not only Shell but also other Multinational Investment corporations that utilize

to the point of exhaustion.The resources of the host country are maximized and used for the benefit of the investor. This is a classic example of why less developed countries remain that way, despite investments.

It is because of the fact that there are less strict laws imposed on investors. However, it changed. In Nigeria, during the early 90’s the government begun its activist role in ensuring the safety of their environment and protecting their resources. However, in order to keep abreast with other developing countries, Africa needs to continue restructuring its economy.It has to broaden its recognition for the need of capital and entrepreneurship through foreign investments. The question now is that how would such changes affect the still fragile condition of underdeveloped and developing nations? Would the world economy growth benefit or hurt them? The edge host countries need to project Presently, the concern is focused on Israel's current political State.

Due to the situation, Israel is experiencing an economic slowdown.However, because of the high potential for growth and development, attributable to the fact that aside from advanced technology, Israel can offer manpower given the fact that it has over six million, majority of whom are English speaking citizens. Israel has played an important role for Canadian exports that is why Canadian firms continue to develop joint ventures with Israel, more recent is the partnership in information technology, biotechnology and construction. In relation to South Africa, Israel has less investment impediments.

However, they are analogously situated in terms of experiencing political strife. Both countries know the devastating effect of a political conflict or issue in the economy. Another country noteworthy of mentioning is Egypt.

The reason why Egypt became one of the largest and leading states I the Arab world is the fact that it has a broad spectrum of goods and services. Egypt and South Africa have Canada as foreign investor in common.

Both countries seek to attract large amount of foreign direct investment from Canada, since Canada is considered an important economic figure in the world market (Whitaker, 1999).Egypt's economy improved because of reforms in the last decade that led to is liberalization as well as improvement in economy, bringing more trade prospects. Similarly, laws that take cognizance of areas like banking, law and intellectual property rights have been passed. Correlating Egypt and Israel to South Africa is not difficult although these countries differ largely in economy, these countries have a common denominator which is the desire to attract FDI and eliminate existing investment impediments.These host countries have shown why they attract Multinational investments more than other countries do.

IV. Conclusion The expansion of businesses and various types of enterprise require careful analysis and familiarization of its target market. This is very much relevant in order to assess the company performance with respect to its chosen group of would-be consumers in the future. When thinking of going international and expanding a business, it is a primary consideration to evaluate the strength and weaknesses of the company with respect to its marketability in a large scale.This is attributable to the fact that going global means getting out of its home base and inching a step away from its “comfort zone”. Similarly, entering a relatively different market offers an adjustment phase that the company needs to overcome in order

to fully establish itself as operational.

While deciding which market to enter, a good selection of information can reduce the perceptions of risk in international operations as well as the arising from managers’ lack of familiarity with overseas markets and the higher level of uncertainty in international business.REFERENCES:Aitken, B. and Harrison, A. (1999) 'Do domestic firms benefit from direct foreign investment? Evidence from Venezuela , American Economic Review vol. 89, p. 605.

Altenburg, T. (2000) 'Linkages and spillovers between transnational corporations and small and medium-sized enterprises in developing countries: opportunities and policies', in Proceedings of the UNCTAD X Special Round Table 'TNC-SME Linkages for Development', February, Bangkok . Geneva and New York : UNCTAD.