international direct investment国际直接投资中英.docx
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internationaldirectinvestment国际直接投资中英
InternationalDirectInvestment
1.1Introduction
Studyingforeigndirectinvestment(FDI)isimportantbecauseproductionfacilitiesabroadcomprisealargeandincreasinglyimportantpartofinternationalcompanies’activitiesandthusareanintegralpartoftheirstrategicthrusts.Infact,FDIisnowmoreimportantthantradeasavehicleforinternationaleconomictransactions.Nooneexplanationortheoryencompassesallthereasonsforsuchinvestment.
1.2TheMeaningofForeignDirectInvestment
1.2.1TheConceptofcontrol
Fordirectinvestmenttotakeplace,controlmustfollowtheinvestment;otherwise,itisknownasportfolioinvestment.Theshareofownershipnecessaryforcontrolisnotclear-cut.Ifstockownershipiswidelydispersed,thenasmallpercentageoftheholdingsmaybesufficienttoestablishcontrolofmanagerialdecisionmaking.However,evena100-percentsharedoesmotguaranteecontrol.Ifagovernmentdictateswhomacompanycanhire,whatthecompanymustsellataspecifiedprice,andhowearningswillbedistributed,thenitcouldbesaidthatcontrolhaspassedtothegovernment.Governmentsfrequentlydoimposethesedecisionsoncompanies.Butitisnotonlygovernmentsthatmayjeopardizethestockholders’control.Ifsomeresourcethecompanyneedsinordertooperateisnotregulatedbythecompany’sowners,thenthosewhocontrolthatresourcemayexertsubstantialinfluenceonthecompany.Becausedirectinvestmentscanbedifficulttoidentify,governmentshavehadtoestablisharbitrarydefinitions.Usually,theystipulatethatownershipofaminimumof10or25percentofthevotingstockinaforeignenterpriseallowstheinvestmenttobeconsidereddirect.
1.2.2TheConcernaboutControl
GovernmentalConcern
Whyshouldanyonecarewhetheraninvestmentiscontrolledfromabroad?
Manycriticofthepracticeareconcernedthatthenationalinterestofthebestcountrywillnotbebestservedifamultinationalcompanymakesdecisionsfromafaronthebasesofitsownglobalornationalobjectives.Forexample,ontheonehand,GM,aU.S.company,ownsa100-percentinterestonVauxhallMotorsintheUnitedKingdom.GM’scorporatemanagementintheUnitedStatesisconcerneddirectlywithandmakesdecisionsaboutpersonnelstaffing,exportprices,andtheretentionversuspayoutofVauxhall’sprofits.ThislevelofcontrolconcernstheBritishpublicbecausedecisionsthatdirectlyaffecttheBritisheconomyarebeingmade,oratleastcanbemade,intheUnitedStates.PrivateBritishcitizens,ontheotherhand,ownsomesharesofGM.Becausethesearenotenoughforcontrol,theBritishcitizensexpendnotimeoreffortonmakingmanagementdecisionsforGM.NoristheU.S.populaceconcernedthatvitalGMdecisionswillbemadeintheUnitedKingdom.Thisdoesnotmeanthatnoncontrolledinvestmentsareunimportant,however.Theymaysubstantiallyaffectexchangerates,andtheymayplayanimportantpartinacompany’sfinancialmanagementandstrategy.
InvestorConcern
Controlalsoisveryimportanttomanycompanieswhoarereluctanttotransfercertainvitalresourcestoanotherdomesticorforeignorganizationthatcanmakeallitsoperatingdecisionsindependently.Theseresourcesmayincludepatents,trademarks,andmanagementknow-how,whichwhentransferredcanbeusedtounderminethecompetitivepositionoftheoriginalholders.Thisdesiretodenyrivalsaccesstocompetitivereferredtoastheappropriabilitytheory.
Inaddition,operatingcostsmaydecreaseandthespeedoftechnologicaltransfermayincreasewhencontrolisretained,forseveralreasons:
1.Theparentandsubsidiaryarelikelytoshareacommoncorporateculture.
2.Thecompanycanuseitsownmanagers,whounderstanditsobjectives.
3.Thecompanycanavoidprotractednegotiationswithanothercompany.
4.Thecompanycanavoidpossibleproblemsofenforcinganagreement.
Thiscontrolthroughself-handlingofoperations(internaltotheorganization),ratherthanthroughcontractswithothercompanies,isoftencalledinternalization.Forexample,IntelfoundthatthetransferoftechnologytoindependentmotherboardmanufacturersinTaiwanwastoslow,soitmovedintoTaiwanwithitsownproductionfacility.
Despitetheadvantagesofcontrol,manycircumstancesexistinwhichassetsaretransferredtononcontrolledentities,suchastransferringtrademarksandtechnologythroughlicensingagreements.Inaddition,companieslackresourcestocontrolallaspectsoftheirproduction,supplies,andsale,sotheyfunneltheirresourcestoothoseactivitiesthataremostimportanttotheirstrategiesandtheirperformance.
1.2.3MethodsofAcquisition
Foreigndirectinvestmenttraditionallyhasbeenconsideredaninternationalcapitalmovementthatcrossesborderswhentheanticipatedreturn(accountingfortheriskfactorandthecostoftransfer)ishigheroverseasthanathome.AlthoughmostFDIsinvolvesometypesofinternationalcapitalmovement,aninvestormaytransfermanyothertypesofassets.Forexample,WestinHotelshastransferredverylittlecapitaltoforeigncountries.Instead,ithastransferredmanagers,costcontrolsystemsandreservationscapabilitiesinexchangeforequityinforeignhotels.
Asidefromcommittingnonfinancialresources,therearetwoothermeansofacquiringassetsthatdonotinvolveinternationalcapitalmovementsinanormalsense.Forexample,acompanythatexportsmerchandisebutholdspaymentforthosegoodsabroadcanusesettlementtoacquireaninvestment.Inthecase,thecompanymerelyhasexchangedgoodsforequity.Althoughthismethodisnotusedextensivelyforinitialinvestment,itisamajormeansofexpandingabroad.Initiallyacompanymaytransferassetsabroadinordertoestablishasalesorproductionfacility.Iftheearningfromthefacilityareusedtoincreasethevalueoftheforeignholdings,FDIhasincreasedwithoutanewinternationalcapitalmovement.Second,companiesindifferentcountriescantradeequity.Forexample,KLMintheNetherlandsacquiredashareofNorthwestAirlinesintheUnitedStatesbygivingNorthwestownersstockinKLM,amovethathelpedintegratethecompetitivestrategiesofthetwocompanies.
1.3TheRelationshipofTradeandFactorMobility
Whethercapitalorsomeotherassetistransferredabroadinitiallytoacquireadirectinvestment,theassetisatypeofproductionfactor.Eventually,thedirectinvestmentusuallyinvolvesthemovementofvarioustypesofproductionfactorsasinvestorsinfusecapital,technology,personnel,rawmaterials,orcomponentsintotheiroperatingfacilitiesabroad.Thereforeitisusefultoexaminetherelationshipoftradetheorytothemovementofproductionfactors.
1.3.1TheTradeandFactorMobilityTheory
Tradeoftenoccursbecauseofdifferencesinfactorendowmentsamongcountries.Butcontrarytohistoricaltreatisesontrade,productionfactorsthemselvesalsomaymoveinternationally.Factormovementisanalternativetotradethatmayormaynotbeamoreefficientallocationofresources.Ifneithertradenortheproductionfactorscouldmoveinternationally,acountrywouldhavetoeitherforgoconsumingcertaingoodsorproducethemdifferently,whichineithercasewouldusuallyresultindecreasedworldwideoutputandhigherprices.Insomecases,however,theinabilitytoutilizeforeignproductionfactorsmaystimulateefficientmethodsofsubstitution,suchasthedevelopmentofnewmaterialsasalternativesfortraditionaloneorofmachinestodohandwork.Forexample,theproductionofsyntheticrubberandrayonwasundoubtedlyacceleratedbecausewartimeconditionsmadeitimpracticaltomovesilkandnaturalrubber,nottomentionsilkwormsandrubberplants.
1.3.2Substitution
Whenthefactorproportionsvarywidelyamongcountries,pressureexistforthemostabundantfactorstomovetocountrieswithgreaterscarcity,wheretheycancommandabetterreturn.Thusincountrieswithanabundanceoflaborrelativetolandandcapital,laborerstendtobeunemployedorpoorlypaid;ifpermitted,theseworkerswellgravitatetocountriesthathaverelativelyfullemploymentandhigherwages.Similarly,capitalwilltendtomoveawayfromcountriesinwhichitisabundanttothoseinwhichitisscarce.Forexample,MexicoisanetrecipientofcapitalfromtheUnitedStates,andtheUnitedStatesisanetrecipientoflaborformMexico.Iffinishedgoodsandproductionfactorswerebothcompletelyfreetomoveinternationally,thecomparativecostsoftransferringgoodsandfactorswoulddeterminethelocationofproduction.(However,asistrueoftrade,therearerestrictionsonfactormovementsthatmakethemonlypartiallymobileinternationally,suchasimmigrationrestrictionsintheUnitedStatesthatlimitthelegalandillegalinfluxofMexicanworkers.)
1.3.3ComplementarityofTradeandDirectInvestment
Despitetheincreaseindirectinvestmenttoproducegoodsforre-importing,companiesusuallysendsubstantialexportstotheirforeignfacilities;thusFDIusuallyisnotsubstituteforexporting.Infact,aboutathirdofworldtradeisamongcontrolledentities,suchasfromparenttosubsidiary,subsidiarytoparent,andsubsidiarytosubsidiaryofthesamecompany.Manyoftheexportsfromparenttosubsidiarywouldnotoccurifoverseasinvestmentsdidnotexist.Inthesecases,factormovementsstimulatetraderatherthansubsidiaryforit.Onereasonforthisphenomenonisthatdomesticoperatingunitsmayshipmaterialsandcomponentstotheirforeignfacilitiesforuseinafinishedproduct.Forexample,Coca-Colashipsconcentratetoitsbottlingfacilitiesabroad.Foreignsubsidiariesoraffiliatesalsomaybuycapitalequipmentorsu