role of FDI, aid and debt Flashcards
why do fdi target developing countries
- rich natural resources
- growing market
- gvt regulations easy
- cost labor low
advantages associated with fdi
- fill gap money
- MNCs provide employment, education, training
- MNC greater access to technology
- gvt gain more money
- MNC improve infrastructure
- more choices at lower prices for consumers
problems with fdi
- little education, cheap labor
- too much power and influence
- MNC transfer profit
- mistreat natural resources
- lots of pollution
- money flows out of the developing country
foreign aid
- help natural disaster
- improve political strategic relations
- fill saving gap and encourage investment
- fund specific projects
categories of aid
- humanitarian aid = short term
- development aid = long term, eg: ODA, OECD
concerns about aid
- no correlation between the level aid and level of development
- interest low minority that government project
- affect domestic producers badly
role of ngo
- provide disaster relief and promote development
- lobbyist to influence gvt in developed countries
- improve human capital
- focus on women
debt and imf
- heavily indebted poor country (HPC)
- multilateral debt relief
effect of imf funding
- increase unemployment
- decrease low real wages
- decrease access to free education and health care
- increase prices of essential product
arguments for debt relief
- cannot pay their debt
- gvt unable spend money on areas
- eonomic growth slower
- odious debt: did not serve the country
- boomerang effect=environmental cost, drug usage, terrorism, more immigration , more conflicts…
types of aid
- official development assistance ODA = from the gvt
- unofficial = from ngo
types of development aid
- long term loans = low interest rate, repayable 15-20 years
- tied aid = under conditions, buy goods from donor
- project aid = no need to repaid eg: world bank
- technical assistance aid = combined with project aid
- commodity aid = increase prodctivity
fdi def
Overseas investment by multinational corporations
greenfield investment def
a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Corporate Social Responsibility (CSR)
as the voluntary activities undertaken by a company to operate in an economic, social and environmentally sustainable manner
Official development assistance ODA
is a term coined by the Development AssistanceCommittee (DAC) of the Organisation for Economic Co-operation and Development(OECD) to measure aid. The DAC first used the term in 1969.
tied aid
is foreign aid that must be spent in the country providing the aid (the donor country) or in a group of selected countries
project aid
gives for a specific purpose
technical assistance aid
Development aid (also developmentassistance, technical assistance, international aid, overseas aid, official development assistance (ODA), or foreignaid) is financial aid given by governments and other agencies to support the economic, environmental, social, and political development of developing countries
commodity aid
Flows of goods and services with no payment in money or debt instruments in exchange.
dependency on aid
as a situation in which a country cannot perform many of the core functions of government, such as operations and maintenance, or the delivery of basic public services, without foreign aid funding and expertise
imf
an international organization headquartered in Washington, D.C., of “188 countries working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty
debt relief
reduction or cancellation of debts
odious debt
debt that has been incurred by corrupt governments
and used for purposes that did not serve the interests of the people
transfer pricing def
is the setting of the price for goods and services sold between controlled (or related) legal entities within an enterprise. For example, if a subsidiary company sells goods to a parent company, the cost of those goods paid by the parent to the subsidiary is the transfer price.
