The Characteristics Of The Dunning Model Of FDI
The Dunning looked into motives for attempting FDI modes of making this investment as well as several characteristics. The rationalities motivating firms to take in charge the FDI have prompted and take in international business for four decades now.
Motives of FDI The dunning classified four motives:
1: Resource seeking
2: Market Seeking
3: Efficiency Seeking
4: Strategic asset seeking Resource seeking firms are prompting for investment internationally to take over specific resources add a lower cost than there domestic country. Dunning differentiate three types of resource seeker. 1: Those who are the seekers of physical resources such as raw material or an agriculture goods.2: Those who are the seeker of inexpensive …show more content…
The strategic asset seeker tend to take advantage of common ownership. For the activities to compute in diverse environment.
Dunning indicate that resource and market seeking qualify initial FDI where as efficiency and strategic asset seeking qualify sequential FDI.
Modes of FDI:
Dunning substitute three modes of FDI.
1: Greenfield investment is usually defined as investment of a firm that uses stocks to assemble an exclusively new economic entity by retracing a new facilities. Greenfield mode is like to be chosen when the production process is labor intensifier.
2: Acquisition mode comprises of using the firms fund to purchase an already subsisting operations. This is done by gaining the controlling equity share in a company which antecedently possess operations. Acquisitions mode is likely be chosen when a acquired company is capital intensifier.
3: Joint venture comprises of combining assets in a common and a separate origination by two or more firms or shareholders to share ownership. A joint venture is likely to be chosen when it is waist full or risky for a foreign investor.
The foreign direct investor may gain voting power of a venture in an economy via any of the following …show more content…
It required techniques that will help promoting FDI in the economy that positively affected the economic development. The objective of manuscript was the creation of employment with FDI in the continent of Asia during the year 1985-2005 in Pakistan, India and china. Three variables were used in his sketch employment, FDI, gross domestic product. The estimation technique that was used is imp-pesaran-shin. Seemingly unrelated regression (SUR) TEST was also used to find out the impact of FDI on employment in Asian countries. Padroni of panel co integration were used. The results advocated that there was a positive relationship between FDI and employment level in these countries. It also demonstrated that an implication of FDI policy by the government of host country was