Emerging markets Essay Example | Topics and Well Written Essays - 2750 words

Emerging markets - Essay Example Countries globally are developing by encouraging foreign direct investments (FDI). They are doing this in order to increase their economic strength and move forward economically. Emerging markets have developed in various countries especially developing countries. Emerging markets attract FDI based on the mode of the economy in terms of development, political and market share. This paper explains foreign direct investment (FDI) in emerging markets and focuses in China as one of the emerging markets encouraging FDI. Justification of the Topic Foreign direct investment (FDI) in emerging markets is chosen as the topic of study in this article. FDI relates to an investment done by a firm in a foreign country. The foreign firm does the investment for creation of commodities. FDI is encouraged by the availability of factors of production, markets share and flexibility of economy. Foreign direct investment (FDI) is taken to by the big firms to the developing countries mostly the emerging ec onomies. This is seen as a change from the previous act whereby most firms in developing countries were investing in their own countries. The rise of foreign direct investments on emerging markets has been increasing since 1980. The same factors noted above increases the rate of FDI in emerging markets. ... Resmini (2000) adds that increasing FDI has been seen in the developing countries. The idea is supported by various factors including the cost of labour, political stability, stable financial institutions and stable economies in the host countries. The author explains further that investors have been able to view and analyze the above mentioned factors to conduct investments in emerging markets. Some of the emerging markets have not been exploited because of the countries’ political instability, poor financial regulations and weak development shown by workers. FDI on emerging markets has also be supported by the changes in various countries whereby the investors have are able to acquire state owned items, which has been happening in various countries especially Asian and Latin American countries. The fact is that the investors in the above mentioned countries are able to obtain the assets because of financial crises which have recently hit the countries. Furthermore, the inven tors in those markets are encouraged by cheap and available labour. Despite the search of strong financial institutions and stable economies by the investors in emerging markets, most of the emerging markets have got the above disadvantages as compared to developed countries. FDI investing in the emerging markets are not the same with the FDI in developed countries. They use different strategies to counter the difficulties in the developing countries to increase their investments. One of the strategies is the provision of lower wages to the workers since they are operating in unstable economies. Emerging markets are currently the sources to the growth of most countries’ economies. This can be evidenced from the current growth seen in countries like China, Brazil, South