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The World Bank offers information on the business environment in different countries. To
explore the information, go to http://www.worldbank.org/, click on “Countries” at the bottom of
the screen, and select a country in which you are interested. You might want to choose the
country you are using for your term project–though that is not required.
Review information on the site regarding U.S. investments in the country and also countries in
which the chosen country is investing. Discuss what you discovered. What does this tell you
about the country? If you were asked to build a manufacturing facility in this country, what
would you recommend? Why?
Reply these answers
1/
My term project is on Australia and conducting a greenfield investment for Fitbit and
their fitness watches in that country. Unfortunately, the website provided does not
offer information about that part of the world (they don’t offer any information on
most of the industrialized nations, although BRIC countries are well represented).
Instead of Australia, I chose a country most people don’t even know exists:
Azerbaijan. This former state of the USSR has a GDP of just $53.05 billion, similar to
the state of Montana, who ranked 48th in the US by GDP in 2014 (Bureau, 2016).
Azerbaijan sits in a key location between Iran and Russia between the Black and
Caspian seas. It’s primary sources of income are oil related, but this income cannot be
counted on as world oil demand declines. This country has made improvements to
freeing up the economy, but still struggles with cumbersome permits, inspections, and
bureaucracy that hinders foreign investment and free trade. Additionally, regional and
government instability hamper foreign investment. Before the World Bank can
contribute and facilitate FDI, the social and economic climate must be improved
(World, 2016).
According to the US Department of State (2014), Azerbaijan is not a great place to
invest when considered from a business perspective. On the corruption index it rates a
128 out of 177, and 71 out of 189 on the “ease of doing business” index. The
economic freedom index sits at just 81 of 177. All of this points to negative factors to
consider for FDI. Considering all this, it’s no surprise that as of 2012, inward FDI
totaled $11.11 billion primarily from Turkey, the UK and Norway. Outward FDI
totaled only $7.51 billion in the same year, with the money going into Turkey and
Georgia for the most part. Before any consideration for FDI from a US company
could be considered, numerous strides in economic and policy freedom needs to be
made. The risk of loss would be too great with other countries available with the same
benefits that Azerbaijan offers (cheap labor and access to oil and gas deposits). Until
policy can be adjusted to reflect a free market friendly and stable environment for
FDI, this country will continue to stagnate.
2/
Exploring the World Bank for information in China I found that China and the World Bank
Group have forged a strong two way and evolving partnership. China focus on three main
themes: green growth, inclusive development, and mutually beneficial relations with the
world. As of April 6, 2016 Bank cumulative lending to China was about $57.19 billion for 396
projects. China invests in other emerging economies as well particularly in Africa. China is
progressing to continue to reduce poverty. China has lifted more than 800 million people out of
poverty. They have made dramatic progress over the past three decades. China has experienced
rapid economic and social development. GDP has grown almost 10% a year which is the fastest
expansion by a major economy in history. China has a population of 1.3 billion and is the
second largest economy. China is still a developing country and would be a great place to build a
smart car electric power manufacturing facility. One of China’s three goals are green growth. I
think because one of their main goals is promoting low-carbon urban transport. A good
manufacturing plant to open up would be building the power charges for the electric smart
cars. To support the electric cars they would need the power stations set up around urban parts
of the city. This would help promote people in using these style cars knowing they had places to
charge them up.
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