Discuss about the Business Research Method and Productivity.
The foreign Direct Investment (FDI) inflow in Cameron Republic as well as further Central African nations originates from different sources such as multilateral, bilateral together with the United Nations (Balasubramanyam, Salisu & Sapsford, 2016). In spite of having growing business trade with China and India, the Sub-Saharan province remains poor in comparison to the South East as well as East Asian nations. It has been observed that Worldwide FDI inflow that touched the topmost position during the year 2000 as well as 2006 was essentially influenced by two different factors. One of the factors that contribute Worldwide FDI inflow is the liberalization as well as deregulation of the regional market. However, deregulation of market can be related to the structural adjustment strategy. The second factor is associated to the managerial capabilities as well as location aspect of sector for resource mobilization. A strong correlation exists between legal structure of the nation and transparency in the investment climate that in turn influence the overall inflow of the foreign direct speculation. Nevertheless, the foreign direct investment (FDI) inflow in the central as well as northern Africa have augmented subsequent to the period 2010 and have led towards high level of indebtedness of different African nations (Blomström, Kokko & Mucchielli, 2013).
Prior study on the global FDI inflow reveals the fact that persistence of negative rate of interest in the worldwide market during the year 1970s was the cause behind the excessive borrowing by different African nations (Balasubramanyam et al., 2016). Essentially, savings was given less priority in specific nations that again directed towards the decline in severe debt crisis period.
Particularly, decrease in both volume as well as quality of the FDI as well as low rate of growth of the economy recorded during the period of early 1980s can regarded as a matter of concern (Blomström et al., 2013). Again, the efforts exerted by government for drawing FDI have not yielded estimated outcomes. In addition to this, different constrains such as human capital development as well as insufficient infrastructure constituted diverse challenges as well as intricacies for development of the private sector. In addition to this, different development economists assume that economic growth relies analytically on both regional foreign investments (Balasubramanyam, Salisu & Sapsford, 2016). Additionally, it can be assumed that the velocity of inflow of foreign asset relies on the rate of growth of economy. Prior to the year 2010, developing nations of Sub-Sahara Africa (SSA) can be considered as a risky investment zone owing to inefficient as well as unregulated market, political unsteadiness and lower rate of investment (Borensztein et al., 2016).
The problem of the present study on Foreign Direct Investment (FDI) and economic development can be associated to inadequacy of inflow of foreign investments into the nation despite the serious efforts by the Cameroon government (Balasubramanyam, Salisu & Sapsford, 2016). Detailed analysis of the FDI climate in the nation reveals the fact that limited number of foreign enterprises has positively contributed foreign capital (Davidson, 2015). Therefore, this limited inflow of the foreign capital in the nation exerts adverse impact on different macroeconomic variables. The deficit in the external current account remained at a considerably low level, in spite of deterioration of GDP by approximately 1% every year on average during the period 2001 to 2005 as opposed to the period 1995 to 2000 (Buckley et al., 2015).
The reason of the present learning is to assess the nature and characteristics of association of foreign capital in overall economic development of HIPC during the current years in Cameroon Republic as well as Central African nations. The primary intention as well as idea of the study is to analyze the way foreign direct investment influences different macroeconomic variables of a particular economy (De Mello Jr, 2013). In addition to this, the objective is also to scrutinize the complete effect of foreign direct investment on overall financial growth of the Cameroon Republic. Further, the current study also helps in analyzing strategies undertaken by Cameroon Republic to lessen the public debt. Additionally, the current research also intends to assess the manner in which effectiveness of foreign direct investment (FDI) can augment the monetary advance as well as debt management (De Mello, 2015). Therefore, the current research study is to utilize quantitative examination using diverse macroeconomic data of the Central African Nations. The learner of the present study intends to make use of specific quantitative method for evaluation of diverse macroeconomic data related to the Central African nations bearing high levels of debt (Balasubramanyam, Salisu & Sapsford, 2016). In the present study, the learner intends to use different economic outlook data for extracting important information as regards the investment outlook, state of political as well as economic affairs (Fosfuri et al., 2016).
As rightly put forward by Smarzynska (2014), Foreign Direct Investment help increasing countries at the time of applying theoretical models whereby FDI is beneficial for the host country progress that is widely shared among the policymakers. Addition to that, research indicates that an augment in Foreign Direct Investment that leads to higher growth rates in poor countries of Sub-Sahara Africa (Schneider & Frey, 2014). Local conditions like development in the financial markets as well as educational level of country that affects collision of Foreign Direct Investment especially on financial enlargement
As opined by Kuemmerle (2015), human resources plays major role in achieving enlargement that benefit from Foreign Direct Investment. This particular research will be focusing majorly on initiatives that are being taken by Cameron Republic for reducing the huge debt burden as well as conducting comparative analysis in poor countries of Sub-Saharan Africa. In other words, the paper will highlight the heavily indebted poor countries initiatives used for debt management. Most of the countries select ways for writing off debt and no creation of new streams of revenues (Buckley et al., 2015). It happens that using new resources with the borrowed fund. It has been noticed that debt becomes burden for most of the countries. It is argued whether increased debt will help in facilitating genuine progress for selected countries (Markusen & Venables, 2015). This particular theoretical framework will indicate the outline and portrayed in the literature review.
In the literature review section, illustration has been given on Growth and Economic Development that reveals conflicting statement with supported evidence (Klein & Rosengren, 2014). In other words, Foreign Direct Investment contributes towards attainment of economic growth and development by countries. Foreign Direct Investment majorly has optimistic effect on economic expansion that guides ways for accumulated capital as well as transfer of new technologies after elaborating of the country (Davidson, 2015). Therefore, Foreign Direct Investment augments economic growth that is indirectly connected with relocate of knowledge. It increases the understanding of stock in the given country arising from acquisition of new skills as well as organizational arrangements and operational management (Hatzius, 2013).
H0- Null Hypothesis; H1- Alternative Hypothesis
H0: Foreign direct investment has no impact on the debt management and economic development in Cameroon Republic and other central African nations
H1: FDI has positive impact on external debt management and economic development in Central African HIP countries.
In this particular section, the researcher will be using secondary sources of information data. Researchers will be collecting data by considering variables for analysis purpose (Haskel, Pereira & Slaughter, 2016). This means researchers will be analyzing the use of statistical techniques. There are various variables used for analyzing the Foreign Direct Investment inflows in Cameroon Republic in the highly indebted countries of Central America. Researchers will be using secondary data information from the World Bank data as well as official data of respective countries (De Mello, 2013). There are various variables that are used for analyzing the percentage of external debt for country from past decade. This takes into consideration domestic saving as well as investment and domestic interest rates. Researchers will be using economic outlook data for collecting information regarding transparency. This will highlight understanding the political stability as well as economic stability and investment outlook. Therefore, level of poverty in the countries will be taken as proxy of economic development (Habib & Zurawicki, 2012).
The major significance of the study is to elucidate the relationship between Foreign Direct Investment as well as financial development (Gregory & Wagle, 2015). In other words, the study will be demonstrating the benefit that will be provided to the prospective investors, Cameroon Government as well as all the major stakeholders that are involved for conducting future research. It is important to consider the fact that Cameroon Government will be using foreign direct investment as a practical tool for increased sources of country income. In this given study, emphasis has been given on formulating the policies in order to magnetize more inflow of Foreign Direct Investment into the nation for tapping into the economic developmental gains (Görg & Greenaway, 2014).
From the perspective of investors, it has been found that the research will be measuring the act that will guide potential investors for exploring the business environment (Froot & Stein, 2014). Addition to that, Foreign Direct Investment is beneficial in most of the multinational companies that intends in making investments in countries. This will help in exposing them for gaining potential benefits and challenges as encountered by investing in countries like Nigeria. Researchers will be contributing to wealth for getting updated information on materials as well as gaining empirical evidence that requires to be carried out in the study (Fosfuri, Motta & Rønde, 2016).
Foreign Direct Investment- Foreign Direct Investment is one of the investments practice used by an enterprises in other country (De Mello, 2015). In other words, these can be obtainable from various forms like Greenfield and Brownfield investment. It has been noted that multinational enterprises will be investing directly by creation of new unit from the foreign country termed as Greenfield investment.
Vicious Circle of poverty-The vicious circle of poverty is essentially considered as a phenomenon where very underprivileged families become insolvent for at least three generation in different underdeveloped nations (Froot, 2013). This phenomenon can be described as a situation where there is low level of per capita income and low rate of savings.
Capital Formation- Capital formation refers to the process of accumulation of capital during a particular period of accounting and for a specific nation. Further, the capital formation also indicates towards the addition of particular capital stock that includes different equipment, instruments, diverse assets and many others (Froot& Stein, 2014).
External Debt- External debt points out towards the total debt of a particular nation that necessarily owes to different foreign creditors, accompanied by specific internal debt that is owed to different regional lenders (Gregory&Wagle, 2015).
Economic development – Economic development refers to the efforts that seek to augment the overall economic welfare, quality of life for a specific society by generating and at the same time retaining jobs and upholding earnings as well as tax base (Habib &Zurawicki, 2012). Thus, economic development primarily indicates adoption of new technologies that can reflect development and progress in social and economic arena in given case.
At the end of the section, it is concluded that variables will be taken for analysis that will guide researchers for reaching at a conclusion regarding the influencing factor for FDI inflows in Sub-Saharan countries. In other words, Cameroon Republic is one of the highly indebted countries. Researchers will be conducting quantitative study by using secondary sources of information. This information will be collected from previous year journal article research paper as well as official websites of countries and World Bank data.
Reference List
Balasubramanyam, V. N., Salisu, M., & Sapsford, D. (2016). Foreign direct investment and growth in EP and IS countries. The economic journal, 92-105.
Blomström, M., Kokko, A., & Mucchielli, J. L. (2013). The economics of foreign direct investment incentives. In Foreign direct investment in the real and financial sector of industrial countries (pp. 37-60). Springer Berlin Heidelberg.
Borensztein, E., De Gregorio, J., & Lee, J. W. (2016). How does foreign direct investment affect economic growth?. Journal of international Economics, 45(1), 115-135.
Buckley, P. J., Clegg, L. J., Cross, A. R., Liu, X., Voss, H., & Zheng, P. (2015). The determinants of Chinese outward foreign direct investment. Journal of international business studies, 38(4), 499-518.
Davidson, W. H. (2015). The location of foreign direct investment activity: Country characteristics and experience effects. Journal of international business studies, 11(2), 9-22.
De Mello Jr, L. R. (2013). Foreign direct investment in developing countries and growth: A selective survey. The Journal of Development Studies, 34(1), 1-34.
De Mello, L. R. (2015). Foreign direct investment-led growth: evidence from time series and panel data. Oxford economic papers, 51(1), 133-151.
Fosfuri, A., Motta, M., & Rønde, T. (2016). Foreign direct investment and spillovers through workers’ mobility. Journal of international economics, 53(1), 205-222.
Froot, K. A. (2013). Introduction to” Foreign Direct Investment”. In Foreign Direct Investment (pp. 1-12). University of Chicago Press.
Froot, K. A., & Stein, J. C. (2014). Exchange rates and foreign direct investment: an imperfect capital markets approach. The Quarterly Journal of Economics, 106(4), 1191-1217.
Görg, H., & Greenaway, D. (2014). Much ado about nothing? Do domestic firms really benefit from foreign direct investment?. The World Bank Research Observer, 19(2), 171-197.
Gregory, N. F., & Wagle, D. M. (2015). Foreign direct investment (Vol. 5). D. R. Weigel (Ed.). World Bank Publications.
Habib, M., & Zurawicki, L. (2012). Corruption and foreign direct investment. Journal of international business studies, 33(2), 291-307.
Haskel, J. E., Pereira, S. C., & Slaughter, M. J. (2016). Does inward foreign direct investment boost the productivity of domestic firms?. The review of economics and statistics, 89(3), 482-496.
Hatzius, J. (2013). Foreign direct investment. Centre for Economic Performance, London School of Economics and Political Science.
Klein, M. W., & Rosengren, E. (2014). The real exchange rate and foreign direct investment in the United States: relative wealth vs. relative wage effects. Journal of international Economics, 36(3), 373-389.
Kuemmerle, W. (2015). The drivers of foreign direct investment into research and development: an empirical investigation. Journal of international business studies, 30(1), 1-24.
Markusen, J. R., & Venables, A. J. (2015). Foreign direct investment as a catalyst for industrial development. European economic review, 43(2), 335-356.
Schneider, F., & Frey, B. S. (2014). Economic and political determinants of foreign direct investment. World development, 13(2), 161-175.
Smarzynska Javorcik, B. (2014). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. The American Economic Review, 94(3), 605-627.
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