What is the international investment environment?
International Investment Environment - Definition
International investment environment is a country for foreign investors in the investment activities of the various conditions of synthesis. International investment and domestic investment, investors in the host country, the high risk, therefore, the international investment environment is good or bad, the investor's level of understanding of international investment and analysis of assessment directly affects the level of investment returns.
International Investment Environment - Classification
International investment environment there is no uniform classification criteria for the classification. From a different point of view, the international investment environment can be a different classification.
(A) from the international investment environment includes many factors, investment environment can be divided into narrow and broad investment environment.
Narrow the investment environment is investment in the economic environment, including a country's level of economic development, economic development strategy, economic system, infrastructure, market sophistication, industrial structure, foreign exchange control and economic price stability and so on. In addition to general investment environment, including the investment environment in the narrow sense, but also includes political, legal, social and cultural impact on the investment potential of all the external factors. We are talking about the investment environment usually refers to a broad investment environment.
(B) from the geographical area is divided, the investment environment can be divided into macro and micro environment for investment.
Macroeconomic environment for investment is the investment in the country within the various factors affecting the sum. Micro-environment for investment within the region is a variety of factors affect the investment sum. Micro-macro investment environment of a country's investment environment component of the investment environment for micro-economic conditions in various regions, social, cultural, infrastructure, incentives, etc. varies, but micro-improvement of investment environment will promote a country's macro-investment improvement of the environment.
(C) the environmental performance of the investment form (material and non-material), it seems, can be divided into hard environment and soft environment.
Hard to affect the investment environment is the external material conditions, such as energy supply, transportation, telecommunications, natural resources and social life of service facilities. That can affect the soft investment environment and a variety of non-material form factors, such as policies, regulations, administrative efficiency, the level of government and religious belief.
(D) the investment environment of stability of various factors to divide, can be divided into natural factors, man-made three types of natural factors and human factors.
Natural factors are relatively stable factors, including natural resources, human resources and geographical conditions, natural resources are man-made mid-term variable factors, including the actual growth rate, economic structure and labor productivity, the human factor is the short-term variables, the main including a country's openness, investment policies and policy continuity.
International investment environment - the constituent elements of
Environmental factors affect a lot of international investment, under normal circumstances, we can analyze four aspects, which are: natural resources, economic status, political legal and social culture.
(A) natural resources. Of natural resources major study of the geographical, demographic and climate in three areas.
1 Geography.
Geographical factors, including geographical location, size, topography, mineral resources, water resources, forest resources. Geographical conditions of a country's investment activities of investors will have a direct or indirect influence, for example, investors in the development and utilization of resources is necessary to study the host country for the purpose of a variety of resources, investors ready to invest in precision instruments industry, we must study the host country whether the terrain conditions affect the degree of precision.
(2) population.
Demographic factors on the impact of direct investment is very significant. Population constitute one of the conditions essential to the market, it not only determine the size of a demand for the product, but also the type of decision needs. For example, high levels of education densely populated areas on the books, music and movies on demand for various products and backward countries and regions are quite different.
3 climate.
The climate of temperature, sunlight, rainfall, storms and typhoons. Many different aspects of climate factors will affect the investment industry. Climate change is not only related to the differences and the production, transportation, but also affect the consumer market potential.
(B) economic conditions. Investment activities in the international economic situation of many factors in the most direct and basic factors, the international investment decisions in the first consideration. Research the economic situation of economic development, improve and market openness, infrastructure conditions, economic and price stability and economic policies and so on.
1 level of economic development.
In general, a higher level of economic development of the country, it means that the state-owned large market, more opportunities and better business conditions, foreign investors will have greater appeal. Measure of the level of economic development is based on level of development of a country's economy, the different countries into developed and developing countries. Developing countries are divided into exporters of manufactures, commodity-exporting countries and oil exporters. Countries at different levels of economic development, the investment demand and market structure has a big difference. The industrial market, developed countries emphasis on capital and technology-intensive products, while developing countries focus on labor-intensive products. On the consumer market, developed in marketing emphasis on product style, performance and features, quality competition rather than price competition. While developing countries focus on the product's features and usability, sales activities due to low levels of literacy and the media are less restricted, the price factor is more important than product quality. The level of economic development caused by market structure and investment needs of different countries would inevitably lead to the size and structure of foreign investment utilization differences.
(2) to improve and market openness.
Normal production and operation of the need for a comprehensive and open market environment. The perfect market system, which means all kinds of major markets such as commodity markets, financial markets, labor markets, technology markets, information markets have been fully developed, forming an organic market system. At the same time, improve the market system also means that each market within the system are standard. Market access, is a country allows foreign investors unrestricted access to its market level. If a country's market there is no use of domestic investors and foreign investors, differential treatment may be considered the country's markets have a higher degree of openness, otherwise, it is considered the degree of openness is not enough. For foreign investors, and improve a country's market opening is a very key issue. Complete and open markets is an important part of a better investment environment for foreign investors have a greater appeal. On the contrary, the market closed and incomplete will only discourage foreign investors. In most developing countries after foreign investors face market problems, while the market is not perfect, the other is subject to more restrictions, thus impeding the entry of foreign investment.
3 infrastructure conditions.
Infrastructure conditions, including two aspects: First, the industrial infrastructure of the structure and condition; two service facilities in urban life and the structure and condition. The quality of infrastructure to attract foreign direct investment in basic conditions. Its contents include: (1) Energy, including basic energy and water, electricity, heat and other supply system and supply conditions; (2) transportation, including railways, highways, waterways and air transport in terms of conditions; (3) communication facilities, including postal services, radio, television, telephone, telex and other aspects of the facilities; (4) raw material supply system; (5) financial and information services; (6) The condition of the facilities of city life, such as housing, entertainment, food, etc.; (7) culture, education, sanitation and other services. Infrastructure investment is closely related with the international external material conditions, foreign investors are unlikely to a shortage of energy supply, transport facilities, lack of information and difficult living conditions of the areas of investment. Because of this, the host government attach great importance to the construction and improvement of infrastructure.
4 economic and price stability.
Whether economic and price stability, mainly to see the following indicators: (1) whether the rate of sustained economic growth, if there fluctuated, from a large case of large V, were seen as economic instability; (2 ) the level of inflation, the higher the inflation rate, the greater the degree of currency depreciation. Western scholars generally to double-digit annual inflation rate is more than the stability of the currency as a threshold; (3) the size of the national debt. If a country is a net debt, especially debt too large, to become "debt economy", then the country's economy is fragile, and once the domestic or world economy some major event, it could lead to large fluctuations in the economy. Due to economic and price stability is to ensure normal production and operation activities of the basic conditions, so foreign investors making international investments generally attach great importance to this factor. In the economic and price instability or poor economic conditions in the case of the enterprise is difficult to achieve the desired economic effect and profit levels, and thus few investors willing to invest in such conditions.
5 economic policy.
A country's economy and international economic policy is often closely linked, and thus also has a large international investment impact. (1) trade and tariff policy. Or the performance of international investment must be accompanied by a large number of international movement of goods, including machinery and equipment, raw materials, intermediate products and finished products in international exchange. What a country's trade and tariff policy, trade policy or the protection of free trade policies, high tariffs or low tariffs, fewer non-tariff barriers are still more non-tariff barriers to international investment have a significant effect. Generally speaking, those who implement the policy of free trade, lower tariffs, fewer non-tariff barriers in countries will be considered to have better investment conditions. (2) economic development policies. This policy, including industrial policy, industrial development policies and regional development policy and so on. Industrial policy is the promotion and protection of domestic industry. Most developing countries in the implementation of industrial policy, the general lack of capital investment will encounter difficulties, it is hoped that through the introduction of foreign capital to make up for this shortfall. In order to protect domestic industries, the implementation of the national industrial policy generally limits the export of finished products, in this case, the original foreign export commodity producers tend to invest in local production or use of other forms of cooperation into the country market. Industrial development policies are often advocated the development of certain priority areas, or remote and backward areas, or the priority development areas and policies. In general, consistent with a country's international investment in regional development policy, often to get certain concessions. (3) foreign exchange and foreign policy. Foreign exchange and foreign policy directly affects the interests of foreign investors, whether related to the free flow of capital, profits and other income remitted back to the question whether, it is generally also very concerned by international investors.
(C) political and legal. Political and legal aspects of international investment is directly related to their hungry security. As the international direct investment is a long-term investment, so investors in the long-term investment in regional political stability and legal protection of great concern. Political and legal aspects including the following factors:
1 political stability.
Political stability of the performance of the government's stability and policy continuity. Generally believed that the government's stability should be subject to any internal and external problems of the troubled and shaken, such as internal divisions, the existence of opposition parties, ethnic, economic difficulties, the potential coup factors, such as irregular change. Government should have the resilience to deal with all conflicts, if the problem exists, that there was some degree of instability. Of course, the problem exists or not, and can be properly resolved, also depend on the objectives, policies, government officials will and to other factors. Continuity of policy is not only the current government's policies must be stability and continuity, but also because it is not the normal impact of the election, the government will not change the normal continuity of the policy change. In international investment, policy continuity is often that of special concern to investors. The greater a country's policy of continuity, indicating that the higher the country's political stability, the more attractive to foreign investors. Otherwise, the lack of appeal.
2 The Government's foreign relations.
Government's external relations, including relations with major trading partners, with his normal relations between the government and so on. A government's current situation and development prospects of foreign relations, foreign investors will also affect the evaluation of the country's political environment. In general, a country's foreign relations are excellent and with more and more countries close contacts and friendly relations, the foreign investors to the country's political and environmental assessment will be better. On the contrary, the evaluation badly, thus affecting the access of foreign investors.
3 political system.
Usually refers to the political system of government systems, including the country's form of management, structure and electoral system, citizens exercise their political rights system. A country's political system is always the same fundamental nature of the country and its social and economic infrastructure to adapt. Different systems, in particular in the political and administrative system, economic management system, the structure of government departments, administrative efficiency and so on. In general, with the capital-exporting countries could have different political systems of foreign investors some degree of risk, but may also have a certain appeal to foreign investors.
4 legal integrity of the system.
Health of the legal system, mainly referring to a sound legal system and the implementation of codes. In general, the specific activities of various kinds of regulations are the basic guidelines, some of which laws and regulations on foreign investors have a direct relationship. For example, commercial law, corporate law, antitrust law, labor law, tax law, foreign law, customs law, and so on. Especially in countries foreign investment law is the law of particular concern to investors, it is an important factor affecting foreign investment into one. The main emphasis of the practice of law in the legal status of the implementation process of the fair sex. Strictly on the law and fair use will generate more attractive to foreign investors, on the contrary, if the failure to abide by a denial of justice, will affect foreign investment enthusiasm.
Improve and perfect the legal system in the international investment environment occupies an extremely important position. Whether it is political, or economic environment or social environment, mostly through legal forms. All countries in the world to safeguard national sovereignty and economic interests in the forefront to develop their use of foreign investment laws. As the political system, economic system and social and cultural aspects there is a big difference. In general, developed countries and strong liquidity, advanced technology, international competition ability, and thus more open to foreign investment legislation to take the attitude, less restrictive measures, but also less incentives; developing countries is weak, lack of funds, technological backwardness, weak international competitiveness, which is often self-contradictory attitude to foreign investment, while incentives are more restrictive measures on the other hand more vigorously its purpose is to introduce foreign capital, but also protect their national industries.
(D) social and cultural. Due to the geographical and historical reasons, the social and cultural background is different, and even in some countries there are regional differences. The difference in this regard so that foreign investors invest in the host country will experience some inconvenience, this is not convenient for international investment is the degree of influence. Social and cultural factors are:
1 language and cultural traditions.
Differences in language and cultural traditions, often directly affect the international investment activity factors. Different cultural traditions caused by the different social attitudes, consumer habits, living standards, ways of thinking, etc., will produce different levels of international investment activity effects. In general, language differences and cultural traditions of the smaller, more easily communicate with investors and host countries, thus more conducive to international investment activities; the contrary, it will discourage foreign investors to enter a country for investment.
(2) educational status.
A country's level of education, generally available from the following aspects to examine: First, the country's education system and the structure is reasonable; the second is the general education level; third is a combination of education and social needs; four general literacy conditions; Fifth, basic education, vocational and special education status of a few; six national education is the basic attitude. High levels of education, labor force quality bound, high production efficiency and economic benefits will be high, like return on investment, there are attractive to foreign investors. On the contrary, it will affect the entry of foreign investors.
(3) Social Psychology.
Social and psychological values, including the general public, the attitude of the matter distribution, the general view of industry and commerce, on business and risk attitude, especially for foreign investors and the business activities of the attitude of superior-subordinate relationship and the existing inter-relationships, national psychology and national consciousness. These factors affect the foreign investment is often more subtle. In general, they affect a country's degree of acceptance of foreign investment, foreign and local capital and local government cooperation and the status of cooperation and non-governmental organizations, foreign investment benefits and operating results of the distribution.
4 religious beliefs.
There are at present Christianity, Islam and Buddhism's three major religions, if the small denominations and branches are included, then more, at least dozens. Different religious beliefs on people's values, attitudes and consumption patterns, etc. will have a significant impact. For example, from the traditional point of view, the Christian advocates to work, thrift, savings; Buddhism and Hinduism emphasizes spiritual values, degrading material desires; Islam forbids eating pork, drinking, etc., which will be on international investment activities have a direct or indirect impact . Recipient countries from the point of view, religious institutions and some of the more complex the strict rules and prohibitions, often more so that foreign investors balked. From the perspective of international investors, the more respect the religious beliefs and customs of the host country and be used moderately, then more able to carry out investment activities in the country and be successful.
