Foreign Investment in Malaysia and Its Impact on Economic Growth Essay Example for Free

Foreign Investment in Malaysia and Its Impact on Economic Growth Essay Foreign direct investment (FDI) means an international capital flows in which a firm in one country creates or expands a subsidiary in another (Krugman Obstfeld, 2006). Directly, it means the subsidiary not only has the financial obligation towards its parent company, it extends to the same organizational structure and value. Theoretically, companies involve in FDI due to cost saving on the location, usage of abundance resources, technology transfer, vertical integration (coordinating supply and demand to an agreed price) and currency exchange that will reduce cost and increase value to shareholders. FDI in a host country is expecting to boost the manufacturing and services industry and consequently boost up the economy. FDI impact on economy and social The area has been widely studied by economist and among others, in East Asia, FDI is used as channel of increasing capital stock and it has positive effect on the economic growth in Vietnam (Thu Thi, Paitoon, Bangorn, 2010) and more growth in Vietnam if the invest is done in education, training, financial market development (Anwar Lan Phi, 2010). FDI increase wages of skilled and unskilled labour (Oladi, Gilbert, Beladi, 2011) and it could increase the household spending in the host country. However, the distance of investors from origin country to destination or host country plays an important role in promoting FDI in the latter. This is a sample of macroeconomic gravity impact whereby the investors easily commute from their home country and understanding of the custom and language could reduce the barrier in communication. Foreign investment could contribute in ethical and structural norm in an organization rather than the western cultural transfers. Local cultural norm shall be adhered to during the negotiation process in order to have a win-win situation between investors and local entrepreneur. It is also discussed that political stress may impacted the inflow of FDI by tightening the rules and regulation which in turn will make the investment environment in destination country is less attractive compare to global environment. FDI are positive correlated with network (Shaner Maznevski, 2011) and regional integration (Nathapornpan Piyaareekul Peridy, 2009); host countries’ levels of financial market and institutional development, better governance and appropriate macroeconomic policies (Polpat, Bangorn, Paitoon, 2011; Vadlamannati, Tamazian, Irala, 2009); productive improvement and learning experience from previous FDI (Takechi, 2011). Therefore, a good support from the government is vital in promoting the FDI in host country. Not only FDI expect good support from the government, study shows that FDI creates instability and worsen crisis (Kazi, 2011). The way to control FDIs in one country are defined the terms and sectors which they are allowed to invest; do a thorough risk assessment on the portfolio; and resolve global dispute in an organization such as World Trade Organization (Cohen, 2009). FDI and determinants are co-integrated. Among determinants FDI factors in Malaysia are openness of a company, interest rates, inflation rate, China joining WTO1 and level of corruption.(Ting-Yong Tuck-Cheong, 2010). Comparing to ASEAN as a whole, FDI is looked as more market-seeking rather than profit-seeking due to growing internal markets (Siew-Yong, Chen-Chen, Hui-Boon, 2010). Contrary, Prema-chandra and Swarnim (2011) found that FDI in Malaysia has eroded compare to outflow to another countries. World Trade Organization Facts on FDI in Malaysia (2002-2011) Annual percentage growth rate of Gross Domestic Product (GDP) at market prices based on constant local currency. Aggregates are based on constant 2000 U.S. dollars. GDP is the sum of gross value added by all resident producers in the economy plus any product taxes and minus any subsidies not included in the value of the products. It is calculated without making deductions for depreciation of fabricated assets or for depletion and degradation of natural resources2. Data from World Bank (Chart 1 and Chart 2) revealed that FDI into Malaysia has a significant increment over past decade. However, there was a drop of FDI net inflows in 2009, due to world economic recession in 2008. The uptrend is picking up to a highest point at approximately USD12 billion from the last decade. Comparing to our neighboring country, Thailand, whom has a higher GDP, it has the same effect except the decline trend after 2010. It might be influenced by political crisis in Thailand since 2008 that effected international companies’ decision to extend their business in Thailand. From Chart 3, we gathered that the gross capital formation for Malaysia approximately between 20% to 25% of our GDP, with the lowest point at 17.84% in 2009 after 2008 recession. Foreign investment inflows are following the same trend and it clearly shows that FDI dropped synchronize with capital formation following the recession.

Comparing Vinegar Tom C. Churchill and The Crucible A. Miller Essay

The Crucible is a naturalistic play by Arthur Miller set in a town called Salem and based on true events. The play inspired by the Salem witch trials shows Miller’s personal views and many popular views on McCarthyism. The naturalistic style of the play evokes the audiences emotions and allows the audience to sympathise with the characters. The play also has a sense of realism, illustrating the social and domestic problems of everyday life. The main character John Proctor was said to be a reflection on the situation Arthur Miller saw himself in and portrays many of the emotions he had the time from the McCarthy trials. The crucible focuses on the problems caused by mass hysteria. Similarly, Vinegar Tom a feminist play written by Caryl Churchill written in 1976, also focuses on witchcraft. The play is a non-naturalistic style and is shown using features of Bertolt Brecht’s epic theatre, for example the use of song and choral movement. The play was inspired by the womenâ €™s rights acts of the 1970’s. There are many similarities between the two plays, the first being the plot of the two plays both being about witchcraft and although different styles of theatre are used the same views are shown. There are many evident differences between the two plays. Firstly, the time period and location in which they are set. The Crucible set in the 17th century town called Salem in America, however Vinegar Tom was set in London, England. The set of the play is important as Salem was a puritan town meaning religion was strict and disciplined. The word of God â€Å"the bible† is your authority. There would be no dancing, theatre or entertainment. Sin is a crime and crime is a sin. And most importantly to the play you would believe in witchcraft and the... ... are carrying a child suggests that the character of Daforth and Packer may be sympathetic towards the women. In The Crucible Danforth is sympathetic and believes the likeable character of Elizabeth Proctor, however Packer in Vinegar Tom does not bleive Joan and therefore showing how the character has no emotional impact. To conclude there are many differences yet also similarities between the two plays. The similarities being the plot, and the situations the characters are in. However, the differences being the culture the playwrite lived in and the effects these cultures had on the plays. Each play was written for a different purpose, to impact a different audience and create different emotions. I preffered the play The Crucible because the journey the characters went on was more interesting and as an audience I prefer to be able to relate to the cha racter.

Wal-Mart Entry Into India and Its Effect on Indian Retail Environment

{draw:rect} Introduction: Wal- Mart is the world’s largest corporation and it is one among the biggest private employer of America. Wal- Mart retail store was established in the year 1962 by Sam Walton Wal-Mart also has doing international operation in United Kingdom, Mexico, Canada and many countries throughout the world. In 1970, a Wal-Mart has listed in New York stock exchange. The first Sam club membership warehouse opened in 1983. Wal-Mart has different types super stores, super markets, and Wal-Mart discount stores. In the year, 2009 the sale of Wal-Mart employs is $401 billion. The Wal-Mart is world first retail store in the world. www. walmartstores. com) Effects of the Wal-Mart Entry: Negative effect on the Indian small scale industry Since many of the small scale department stores in India are the major contributors to the Indian economy, the entry of Wal- Mart into Indian market creates a lot of negative effect on the Indian small scale industry. This may lead to lo ose the business to many of the middle and small scale people. Local traders: Local traders from the major of the cities were opposed the entry of retail giant Wal-Mart especially in Delhi because it will affect the local traders or business man and also for small retail shop. They have the issue of domestic traders will be totally neglected. Low price products Wal- Mart in order to capture the Indian market is trying to introduce low price strategy on their products which inturn affect the other local businesses. Local traders later also should implement this pricing strategy which may affect their profit margin. But in return the consumers may benefit a lot from this. Creates excess competition Due to the entry of Wal –Mart into the Indian market the competition may increase between local retailing businesses like Pantaloon, Reliance etc. e can see a tough competition between these business units in future . Supplier’s benefit: Conclusion: From the analysis there is advantages and disadvantages for Wal-Mart to enter in the Indian retailing system. From the arrival of the Wal-Mart to India FDI will be increased in India and most of the retail stores will have the subsidiaries in many of the places to increase the availability of the customer s. Most of the foreign retail outlets is already survive our country. So Wal-Mart can also survive in India if it sets a good strategy for shine and also should be beneficial for the customers and suppliers in the country. Bibliography

Strategic Plans For Multidivisional Structures - 1006 Words

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