Alinghi y la 31 edición de la America´s Cup

The rationale selecting Latin America and South/South East Asia to attract FDI as example:

3.9.1 South/South East Asia

China

 China made a radical commitment to the liberalization of its services in its accession to the WTO. China has introduced laws and regulations that encourage foreign investment. It has introduced laws on tax incentives to reduce the level of risk and uncertainty for foreign firms in committing resources and investing in equity-based operations in China (WIR, 1995). The Chinese government has been aligning inward FDI flows more closely with national priorities, including upgrading industrial sophistication, supporting innovation, setting up outsourcing industries and developing poorer hinterland regions.

Singapore

 Singapore has traditionally been lauded for its lack of corruption, though transparency remains a concern. The government’s overwhelming success in court cases raises concerns about judicial independence (Asia Pacific Investment Climate Index for 2014).  Singapore, which has had a much more open policy, has also used a variety of measures

to attract FDI into its strategic sectors (Elizabeth and Veliyath, 1996).

 Singapore's highly qualified and educated workforce has attracted a large amount of high- tech manufacturing, in particular, electronics (The Economist, 1997),

 Singapore has competitive advantages: highly educated manpower, a superb port, airport, telecommunications, infrastructure and logistical infrastructure.

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 This is since it reopened its economy to foreign investors in 1979. The top corporate tax rate is 17 %, and there are few non-tariff barriers. Foreign investment in several economic sectors is restricted by the government (European Commision Asia-Invest Programme, 2005).

 It has been ranked the most globalised country in the world by Foreign Policy for the fourth time in seven years and the world's second freest economy by the Heritage Foundation for the thirteenth consecutive year (European Commision Asia-Invest Programme, 2005).

 In Asia, Singapore remains the most competitive economy. In 2012, Singapore was the third highest destination country in Asia for inflow of FDI, attracting 348 projects (WIR, 2014).

3.9.2 Latin America

Historically, Latin America has always attracted a large share of direct investment (UNCTAD World Investment Report 2014).

 Privatization policies and economic reforms: nearly 25% of total FDI which flowed into the seven largest countries in the region was a result of privatization.

 Deregulation: many countries have eliminated historical differences between national and foreign companies

 The advance of structural reforms with the region continuing to open itself up to free market policies. The region has been performing at, or above, the equilibrium. Fiscal imbalances have been structurally corrected, increasing surpluses are being reported for trade balances, and external debt ratios have been remarkably reduced (UNCTAD World Investment Report 2014).

 The strength of the domestic market, in which fixed investment has been one of the most dynamic components of the economy's absorption, together with strong household consumption propelled by an improvement in workers' conditions.

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Brazil

 Brazil’s tax environment is known to be highly regulated. This is one of the reasons for Brazil making extensive progress in introducing a more favourable tax climate in order to attract foreign direct investments (UNCTAD World Investment Report 2014).

 In addition, the federal government has granted tax benefits for certain free trade zones. Most of these free trade zones aim to attract investment to the country’s relatively underdeveloped North and Northeast regions.

Mexico

 A number of constitutional amendments have been passed to open up parts of the economy, such as the telecommunications and transportation sectors, to foreign investors (Joma, 2005).

 Mexico’s fiscal reform, passed in 2013, consisted of 34 financial and banking laws which strengthened banking regulations and the legal framework with the intention of increasing competition and transparency in the sector.

 The Mexican Investment Board provides information on labour, advises on the viability of projects, refers investors to bankers, helps cut red tape, and sets up meetings with government authorities (Reda, 2002).

 The country has formed an outstanding network of trade and investment agreements with the world’s largest free trade agreements network, spanning three continents, and offering preferential tariffs to more than 44 countries.

 Competitive labour costs and responsible federal fiscal policies have increased the resilience of the national economy. The availability of skilled labour and well-educated, multilingual managers, the proximity to the USA, both for investments and for markets lowers production costs (Joma, 2005).

 Mexico’s government offers numerous incentives, including job training and tax credits. Therefore, the factors which explain Mexico's increasing attractiveness as a destination for FDI are all related, either directly or indirectly, to economic reforms (Reda, 2002).

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Chile

 In 1970s, the country enacted laws to promote the arrival of FDI, which started flowing gradually (José and Carlos, 2010).

 In addition, Chile has been a trailblazer of economic reform in Latin America, and this also applies to policies regarding FDI. Chile was one of the first economies in the region to seek FDI actively as a part of its development strategy, at a time when many countries were mostly following inward looking policies (WIR ,2014).

 Chile has become one of the main recipients of foreign direct investments of Latin America, keeping up with other FDI magnets from emerging markets of similar size in other regions of the world, such as the Czech Republic and Thailand (WIR ,2014).

3.10 Chapter Summary

This chapter provided an overview of the important role of policies for attracting FDI and focused on FDI inflow to Latin America and into South and South East Asian countries in particular. These countries were focused on because they have been successful in attracting considerable amounts of foreign investments. The chapter has also provided a review of the experiences of China, Singapore, Brazil, Mexico and Chile in order to support this argument. The efforts made by these countries in the last two decades have encouraged many developing countries to follow suit. Finally, the aim of policies for attracting FDI must necessarily provide an appropriate environment for competition in which investors can conduct their business profitably and without incurring unnecessary risk, thus leading to advantages in improving economic efficiency and boosting economic growth to strengthen and improve living standards in a host country. The next chapter is devoted to discussing the impact of risks on foreign direct investments, general political risk indicators, foreign direct investments protection and Multilateral Investment Guarantee Agency.

68 CHAPTER FOUR

THE IMPACT OF RISKS ON FOREIGN DIRECT INVESTMENT (FDI)

4.1 Introduction

This chapter seeks to achieve a number of objectives. Firstly, we will discuss the main factor to be considered when firms in the political environment enter global markets. Secondly, the significance of political perspectives when handling global business and the impact of associated risks on foreign direct investments (FDI) are highlighted.

The performance of the firm’s business is usually impacted by several dynamics, some of which are internal and some external. However, the primary elements that influence its business are the economic climate, political stability, social and technological settings.