FDI- Foreign Direct Investment.
A long term investment that ideally acts as a mutually beneficial venture between the involved parties. In my eyes, FDI is the perfect concept of how capitalism should work. You go into a country and provide them with jobs, improve the standard of living of potentially thousands of people and boost the country's economy; in return you are given a benefits that could only be dreamed of in your home country. Sounds perfect.
Yet looking at the real life examples, this 'win/win' concept rarely seems to happen. On either side, there are examples of people taking advantage of each other. When you look at companies like Nike, the sweatshops that have been discovered show a capitalisation on a workforce that are treated hugely unethically. There is a fine line between co-operation and taking advantage of each other. Far too often, we see this being the case. Nike being one a a long, long list of companies that have been exposed as to treating this foreign workforce as slaves.
On the other hand, there are examples that can be seen from the World Investment Report that shows an ever increasing investment in developing countries. When you the the benefits that China and India have experienced, and in turn, the positive impact that companies and consumers all over the world have experienced as a result of effective FDI, you can see that it is a brilliant concept.
The reasonable cost of the goods that we can purchase in this country are a direct result of these companies taking advantage of these clear and obvious benefits of things such as transport costs, avoiding export constraints in the case of the European Union, the 'win/win' can be massive.
The shame is when you see the countries that are in such dire need of trade, such as Africa that are being ignored. In a perfect world, I would love to see these countries utilised more in future. The capitalist dream needs to be expanded to benefit more areas to capitalise on more trade opportunities and improve the standard of living of people that are struggling to survive. FDI in these areas could be the key to this.
It's interesting that in particular China hasn't avoided Africa. If we just look at a couple of recent news stories:
ReplyDeletehttp://www.bbc.co.uk/news/world-asia-pacific-12427423
http://www.bbc.co.uk/news/world-asia-pacific-12069624
China and Chinese companies seems more than willing to walk into countries and do business with regimes that Western companies would probably reject as far to risky.
Is this Africa's solution then? Investors who see past such small issues as human rights, and call President Robert Mugabe a "good brother"?
Instead of looking to the West? Is hope from the East? And whats the risks of this?
That is quite incredible to see Mugabe referred to in such a way.
ReplyDeleteAlthough I personally consider providing business to such an immorally run country, it would be unfair to starve some of the poorest people in the world of an income.
I would much rather see a reform of these nations which would assure employees could be treated fairly and not abused. Also the money that would come into the economy as a whole I would like to see regulated and distributed rather than see it dissapear into the pockets of corrupt governments.