Trade and foreign direct investment in business services: a modelling approach

Author(s):  
James R. Markusen
Metamorphosis ◽  
2017 ◽  
Vol 16 (1) ◽  
pp. 20-32 ◽  
Author(s):  
Balakrishnan Menon

The automobile industry in India was highly protected in favour of domestic car manufacturers till the late 1980s. The Government of India’s drastic shift towards economic liberalization and Foreign Direct Investment Policy transformed the automobile industry, since the early 1990s. The ensuing decade witnessed many foreign car manufacturers entering the Indian automobile industry with their models and brands. World leaders in passenger cars such as Toyota, Honda, General Motors, Ford, and Hyundai set up manufacturing hubs in India, cashing on the liberalized Foreign Direct Investment Policy of the Government of India. These manufacturers captured the hearts and minds of Indian car customers, with their choicest of car models with high technological and innovative product offerings, with quality and reliability. This transformed the automobile scene from a seller’s market to buyer’s market. Car customers had started developing their own personal preferences and purchasing patterns, which were hitherto unknown in the Indian automobile segment. This study focused on the influences of various attributes and factors in the consumer purchase behaviour of passenger cars. The logistic modelling approach evaluated as to why the car customers prefer different car segmented models in comparison to a base category model. The article attempted to build a passenger car purchase modelling approach, to evaluate consumer behavioural preferences, which eventually influences the purchase behaviour of passenger car owners. The results of the research would contribute to the practical knowledge base of the automobile industry, specifically to the passenger car segments. The model developed has also a great contributory value addition, to the manufacturers and dealers, for evolving a customized marketing strategy approach.


2020 ◽  
Vol 70 (3) ◽  
pp. 407-421
Author(s):  
Artur Klimek

AbstractThis paper is aimed at investigating determinants of recent flows of foreign direct investment (FDI) into advanced business services (ABS) in the European Union with the distinction between “old” (till 2004) and “new” member states (after 2004 extension). Special attention is put on the Visegrád countries. The factors affecting location decisions of multinational corporations were analysed at the national and regional level. The latter approach proved to be very effective due to the fact that foreign companies operating in ABS are highly unequally distributed across economies. Indeed, there are only few regions in economies attracting bulk of the operations in ABS.The research method applied in the paper is negative binomial regression, which measures the probability of occurrence of an ABS foreign firm in an economy or a region taking into consideration its characteristics. This research combines macroeconomic, regional and firm-level data. The explanatory variables are divided into two groups: demand and supply. The main conclusion is the high significance of the supply factors. In other words, foreign companies focus on locations offering large number of skilled workers at reasonable prices. The key recommendation for governments interested in attracting ABS type of investment is to focus on the quality of human capital.


Foreign Direct Investment (FDI) plays a very important role in the development of the nation. It is very much vital in the case of underdeveloped and developing countries. A typical characteristic of these developing and underdeveloped economies is the fact that these economies do not have the needed level of savings and income in order to meet the required level of investment needed to sustain the growth of the economy. In such cases, foreign direct investment plays an important role in bridging the gap between the available resources or funds and the required resources or funds. It plays an important role in the long-term development of a country not only as a source of capital, but also for enhancing competitiveness of the domestic economy through transfer of technology, strengthening infrastructure, raising productivity and generating new employment opportunities. In India, FDI is considered as a developmental tool, which helps in achieving self-reliance in various sectors and in the overall development of the economy. India after liberalizing and globalizing the economy to the outside world in 1991, there was a massive increase in the flow of foreign direct investment. The present paper attempts to analyze the significance of the FDI Inflows in Indian service sector since 1991 and relating the growth of service sector FDI in the generation of employment in terms of skilled and unskilled. The services sector is not only the dominant sector in India’s GDP, but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment. India’s services sector covers a wide variety of activities such as trade, hotel and restaurants, transport, storage and communication, financing, insurance, real estate, business services, community, social and personal services, and services associated with construction.


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