國際金融學(xué)課件：Lecture 12 Foreign Direct Investment

INTERNATIONALFINANCIALMANAGEMENTEUN/RESNICKSecondEdition12ForeignDirectInvestment(Chapter16)EssentialReadingTheWholeChapter1OutlineGlobalTrendsinFDIWhyDoFirmsInvestOverseas?Cross-BorderAcquisitionsPoliticalRiskandFDI2GlobalTrendsinFDIForeignDirectInvestmentofteninvolvestheestablishmentofproductionfacilitiesabroad.GreenfieldInvestmentInvolvesbuildingnewfacilitiesfromthegroundup.Cross-BorderAcquisitionInvolvesthepurchaseofexistingbusiness.3GlobalTrendsinFDITheFDIbetweendevelopedcountriesaccountsfor80%ofthetotalworldFDI.ThedevelopedcountriesarethemainsourceofFDIoutflows.TheacquisitionhasgraduallytakentheplaceofthetraditionalGreenfieldinvestment.4AverageAnnualFDI(inBillions)5WhyDoFirmsInvestOverseas?TradeBarriersLabourMarketImperfectionsIntangibleAssetsVerticalIntegrationProductLifeCycleShareholderDiversification6TradeBarriersGovernmentactionleadstomarketimperfections.Tariffs,quotas,andotherrestrictionsonthefreeflowofgoods,servicesandpeople.TradeBarrierscanalsoarisenaturallyduetohightransportationcosts,particularlyforlowvalue-to-weightgoods.7LabourMarketImperfectionsAmongallfactormarkets,thelabormarketistheleastperfect.Recallthatthefactorsofproductionareland,labor,capital,andentrepreneurialability.Ifthereexistrestrictionsontheflowofworkersacrossborders,thenlaborservicescanbeunderpricedrelativetoproductivity.Therestrictionsmaybeimmigrationbarriersorsimplysocialpreferences.8LabourMarketImperfectionsPersistentwagedifferentialsacrosscountriesexist.ThisisoneonthemainreasonsMNCsaremakingsubstantialFDIsinlessdevelopednations.9IntangibleAssetsCoca-Colahasaveryvaluableassetinitscloselyguarded“secretformula”.Toprotectthatproprietaryinformation,Coca-ColahaschosenFDIoverlicensing.Sinceintangibleassetsaredifficulttopackageandselltoforeigners,MNCsoftenenjoyacomparativeadvantagewithFDI.10VerticalIntegrationMNCsmayundertakeFDIincountrieswhereinputsareavailableinordertosecurethesupplyofinputsatastableaccountingprice.Verticalintegrationmaybebackwardorforward:Backward:e.g.afurnituremakerbuyingaloggingcompany.Forward:e.g.aU.S.automakerbuyingaJapaneseautodealership.11ProductLifeCycleU.S.firmsdevelopnewproductsinthedevelopedworldforthedomesticmarket,andthenmarketsexpandoverseas.FDItakesplacewhenproductmaturityhitsandcostbecomesanincreasinglyimportantconsiderationfortheMNC.12ProductLifeCycleQuantityQuantityTheU.S.LessadvancedcountriesproductionNewproduct Maturingproduct StandardizedproductNewproduct Maturingproduct Standardizedproductexportsconsumptionconsumptionimportsproductionimportsexports13ShareholderDiversificationFirmsmaybeabletoprovideindirectdiversificationtotheirshareholdersifthereexistssignificantbarrierstothecross-borderflowofcapital.CapitalMarketimperfectionsareofdecreasingimportance,however.Managerscanthereforeprobablynotaddvaluebydiversifyingfortheirshareholdersastheshareholderscandosothemselvesatlowercost.14Cross-BorderAcquisitionsGreenfieldInvestmentBuildingnewfacilitiesfromthegroundup.Cross-BorderAcquisitionPurchaseofexistingbusiness.Cross-BorderAcquisitionrepresents40-50%ofFDIflows.Cross-borderacquisitionsareapoliticallysensitiveissue:Greenfieldinvestmentisusuallywelcome.Cross-borderacquisitionisoftenunwelcome.15PoliticalRiskandFDIUnquestionablythisisthebiggestriskwheninvestingabroad.“Doestheforeigngovernmentupholdtheruleoflaw?”isamoreimportantquestionthannormativejudgementsabouttheappropriatenessoftheforeigngovernment’sexistinglegislation.Abigsourceofriskisthenon-enforcementofcontracts.16PoliticalRiskandFDIMacroRiskAllforeignoperationsputatriskduetoadversepoliticaldevelopments.MicroRiskSelectedforeignoperationsputatriskduetoadversepoliticaldevelopments.17PoliticalRisksNationalizationSetupstrictmarket-enteringpolicyFiscalandfinancialpoliciesForeignassetsmanagementmeasuresNon-conversionofcurrenciesEconomicperiodsWar18HedgingPoliticalRiskGeographicdiversificationSimplyput,don’tputallofyoureggsinonebasket.MinimizeexposureFormjointventureswithlocalcompanies.Localgovernmentmaybelessinclinedtoexpropriateassetsfromtheirowncitizens.JoinaconsortiumofinternationalcompaniestoundertakeFDI.Localgovernmentmaybelessinclinedtoexpropriateassetsfromavarietyofcountriesallatonce.Financeprojectswithlocalborrowing.19HedgingPoliticalRiskInsuranceTheOverseasPrivateInvestmentCorporation(OPIC)aU.S.governmentfederallyownedorganization,offersinsuranceagainst:Theinconvertibilityoffor