Discuss the driving forces, characteristics and trends of international investment.

Answer] :(1) Multinational corporations are the main bearers of OFDI;

2) the relative position of the major countries with foreign direct investment has changed significantly;

3) Large scale of foreign direct investment;

4) The location allocation of foreign direct investment is skewed towards developed countries;

5) changes in the sectoral structure of investment;

6) Foreign direct investment, international technology transfer, multi-dimensional and intertwined;

7) The internal division of labor of enterprises replaces the original international division of labor.

8) The emergence of new multinationals.

Interest rate, exchange rate, stability, repayment, tax rate.

Obtain benefits for participating in and controlling the management rights of enterprises.

International direct investment (FDI) is one of the main forms of long-term capital flows, which is different from short-term capital flows in that it requires the investor to have a business entity abroad and directly engage in various business activities. In order to obtain control over the operation of the enterprise, international direct investment is different from indirect investment, and he obtains benefits by participating in and controlling the management right of the enterprise.

Contemporary international direct investment is characterized by increasing scale, changing from one-way to reciprocal flows, increasingly active international direct investment from developing countries, expanding mutual investment within regions, major changes in the structure of the international direct investment sector, and cross-border mergers and acquisitions becoming an important form of investment.

1. Income motivation.

1. Attract new demand**.

A company often grows to a stage where its growth is restricted in its home country, probably due to intense competition. Even if there is not much competition (such as the China Ordnance Equipment Company), its market share in the country may be close to the peak of its potential. Therefore, one possible solution is to consider foreign markets with demand potential.

2. Enter the market with excess profits.

If other firms in the industry prove that they can generate alpha in other markets, TNCs may decide to sell in those markets. It may be intended to lower the current excessively high **.

3. Take advantage of monopoly.

It is possible for a business to become international if it has a variety of resources and skills that its competitors do not have. If a particular company has advanced technology and successfully uses this advantage in its own market, it may also try to take advantage of it in other countries.

Second, cost motivation.

1. Fully benefit from economies of scale.

Companies that seek to expand into new market segments for their lead products increase their earnings and shareholder wealth due to economies of scale.

2. Make use of foreign factors of production.

The cost of labor and land can vary greatly from country to country, and multinationals often try to set up production sites where labor and land** are relatively cheap.

3. Use foreign raw materials.

Due to logistical cost considerations, companies always avoid importing raw materials from a particular country, especially if they plan to resell the processed products back to consumers in that country, and it is more feasible to do so in the countries where these raw materials are located. For example, Nokia has established a VMI center in China.

1. Market-oriented motives: consolidate, expand and open up the market.

1.The investment enterprise is an export-oriented enterprise, and the factory is set up on the spot to avoid protection;

2.There is a certain market in the local area to expand market share;

3.Proximity to the target market to meet consumer needs;

4.The domestic market is saturated, seeking new markets.

Second, the cost of reduction-oriented motivation: the use of foreign cheap production factors, reduce production costs.

1.For the sake of natural resources.

2.It is due to the consideration of taking advantage of factors of production such as cheap labor and land from abroad.

3.For exchange rate fluctuations.

4.It is for the consideration of taking advantage of the high and low tariff rates of each country to reduce production costs.

5.For the purpose of utilizing idle equipment and technological resources such as industrial property rights and know-how.

3. Technology and management-oriented motivation: It is to obtain and use foreign advanced technology, production technology, new product design and advanced management knowledge.

Fourth, the diversification of investment risk-oriented motive: is to diversify and reduce the various risks faced by enterprises.

5. Preferential policy-oriented motivation: It is to take advantage of the preferential policies of the host country and the encouraging policies of the home country.

The main motivations for FDI are:

1. Market-oriented motivation. 2. Reduction of cost-oriented motivation. 3. Technology and management-oriented motivation.

4. Diversify investment-oriented motivation. 5. Preferential policy-oriented motivation.

In addition, there are global strategy-oriented motivations, information-oriented motivations, "following the crowd" motivations, corporate decision-makers' personal preference motivations, and shareholder-oriented motivations.

International investment theory includes the following eight theories, namely: monopoly advantage theory; internalization theory; Product Life Cycle Theory; the theory of international production eclecticism; theory of comparative advantage; Theory of the stages of development of international direct investment; investment-induced factor combination theory; Complementary OFDI theory.

To make money, all actions are generated by interests.

(1) Interest rates.

Interest rates are a major determinant of international indirect investment flows.

Under normal circumstances, capital flows from countries with low interest rates to countries with high interest rates (mostly rentier capital).

Under abnormal circumstances, such as political instability, short-term capital flows may also occur from countries with higher interest rates and political instability to countries with lower interest rates and political stability.

Many countries** use interest rates as a means of macroeconomic shorting, so that capital flows to the development of their own economies.

There are many types of interest rates, including short-term interest rates and long-term interest rates, nominal interest rates and real interest rates, while changes in long-term interest rates and real interest rates are the greater flows and flows of international indirect investment.

b) Exchange rate. Changes in exchange rates have a greater impact on international indirect investment.

Balance of Payments Surplus Strong economic strength (increase in creditor's rights).

Foreign exchange supply > demand The exchange rate rises.

Foreign demand for domestic currencies has increased.

Domestic capital flows.

International capital deficit Weak economy (rising debt).

Foreign exchange supply < demand exchange rate**.

The country's demand for foreign exchange has increased.

Foreign capital inflows.

The exchange rate is the ratio at which one country's currency is exchanged for another's currency, and it is also the rate at which one country's currency is expressed in another country's currency**, that is, the exchange rate. The exchange rate is mainly determined by the supply and demand of foreign exchange, which is a reflection of a country's balance of payments.

1. The level of the exchange rate.

2. Stability of the exchange rate.

The stability of the exchange rate will lead to changes in the direction of international indirect investment flows. If a country's currency exchange rate is high and stable for a long time, investors will move money into that country from countries with low exchange rates and high risks.

Since the exchange rate has a greater impact on capital flows, many countries restrict or encourage the inflow and outflow of capital by formulating policies to return to factories according to their own balance of payments. When a country's balance of payments deteriorates, the state may implement foreign exchange controls to restrict foreign exchange receipts and expenditures from not pre-converting foreign exchange to foreign capital transferred abroad, so as to prevent capital flight. At the same time, the state can also maintain the stability of the exchange rate of its own currency through the implementation of foreign exchange control, so as to achieve the purpose of encouraging the inflow of foreign capital.

3) Risk.

Investors are certainly willing to hold less risky assets if both risky and risky assets can offer the same rate of return. The risk of private investment is high, and the risk of ** investment is small.

4) Solvency.

Generally speaking, the ability to repay debts is directly proportional to the amount of indirect international investment absorbed, and developed countries are able to attract large amounts of international capital because of their strong economic strength, large foreign exchange reserves, and strong ability to service debts. International indirect investment in developing countries is also mostly concentrated in newly industrialized countries and regions. Relatively speaking, these countries and regions have relatively fast economic development and a relatively strong ability to earn foreign exchange through exports.

However, some economically backward countries such as Africa have slow economic development and low ability to repay external debts, so it is difficult to attract more international indirect investment.

Hope it helps.

Summary. The theory of TNC investment in developing countries mainly focuses on why TNCs choose to invest in developing countries, and analyzes the impact of such investment on developing countries and TNCs themselves.

The theory of investment by multinational corporations in developing countries mainly explains why multinational corporations choose to invest in developing countries, and analyzes the impact of such investment on developing countries and multinational corporations themselves.

In the theory of investment by multinational corporations in developing countries, there are many factors that affect the decision of multinational corporations to choose to invest in the transformation of their capital, such as market factors, cost factors, political factors and cultural factors. Among them, market factors are one of the most important factors. Developing countries have large markets and low-cost labour, which attract investment from TNCs.

In addition, developing countries have abundant natural resources and cheap raw materials, which is also one of the important factors for TNC investment.

The theory of TNC investment in developing countries also emphasizes the impact of investment on the countries and TNCs themselves in the development of the bridge. On the one hand, TNC investment can promote economic growth, increase employment, promote the transfer of technology and knowledge, and improve the living standards of local people in developing countries. On the other hand, the investment of multinational corporations can also improve the profits and competitiveness of multinational corporations themselves.

Transnational corporations can reduce production costs, gain access to new markets, and improve the efficiency of resource allocation by investing in developing countries.