blog 7

FDI = Foreign Direct Investment.
This could happen when it is too pricey to make it in your own country or if you have a mature market you could move to another country for a new market and then it is made over there which could cut out costs of importing and exporting.
FDI is a long haul idea it is hard to reverse it, Development of FDI is already with developed countries such as USA, China etc not developing countries. This is because there is a lower economic and political risk you cannot 100% predict what will happen in the economy, But you are more guaranteed that things such as political war will not break out eg-Libya. This has a knock on affect on surrounding countries causing ripples for other countries to follow suit in toppling their government. Because these countries are richly endowed with natural resources eg oil, it will affect rapidly growing markets in other countries that need imports and exports as it all depends on transporting, and if you dont have the right infrastructure you will not have the right FDI.
 
FDI shows to me why there are followers as it encourages new growth, A leader will go because of MSW and risk which encourages companies to persue it if the rate of return is right. In the news at the minute, because of new regulations, there is fear a number of uk banks could move their headquarters abroad.
Quoted in the Telegraph(30th March) - Barclays shareholders are suffering because of uk authorities reluctance to allow them to return to their pre-crisis level of payout. An options paper out next month may force banks to seperate their "casino" investment, and if this happens it might force banks to protect their economic service.
 
Banks might move to China,USA etc as these are already developed countries as there could be a lower economic risk. The UK is a front runner in the financial sector it is what continues to make the "machine" run.I wonder what would happen if this did happen it would be a huge blow as we are so dependant on this sector. We need to encourage more businesses that can produce raw materials in the UK so we maybe have a service to fall back on.