INTERNATIONAL CAPITAL FLOWS

REGULATION
NATIONAL INVESTMENT POLICY

BILATERAL AGREEMENTS

REGIONAL AGREEMENTS
 NATIONAL INVESTMENT POLICY:

EXPORT STIMULATING POLICY

IMPORT-SUBSTITUTION POLICY
 NATIONAL INVESTMENT POLICY:
INVESTMENT REGIMES*
1. Preferential regime
2. National regime
3. Fair and equitable regime
4. Transparency regime
 INVESTMENT CLIMATE
INVESTMENT CLIMATE is the economic and
financial conditions in a country that affect
whether individuals and businesses are willing
to lend money and acquire a stake in the
businesses operating there.
 INVESTMENT CLIMATE
Economic Development & Political Stability

LAW TRANSPARENCY
TAXES

CRIME NATIONAL POVERTY

SECURITY

WORKFORCE INFRASTRUCTURE
 INVESTMENT TOOLS
Financial tools
share participation

Fiscal tools
Tax holidays
Investment tax discounts
Tax credits
Reduced corporate tax
Accelerated amortization

Customs tools
Reduction and elimination of customs tariff in Import/Export
 FDI
Foreign direct investment (FDI) is a direct
investment into production or business in one
country by an individual or company in
another country, either by buying a company
in the target country or by expanding
operations of an existing business in that
country.
 BENEFITS OF FDI
Strengthen the Economic potential
Increases Competition
Development of Human Capital
Technology transfer
Incorporate foreign trade
Environmental and social benefits
 FPI
Foreign portfolio investment is the entry of
funds into a country where foreigners make
purchases in the countrys stock and bond
market.
 BENEFITS OF FPI
Increases the liquidity of DCM
Bring discipline and know-how into DCM
Increases transparency in DCM
Development of equity market
Introducing more sophisticated instruments and
technology for managing portfolio
 FDI FPI
Involvement Involved in management and ownership No active involvement in
(direct/indirect) control; long-term interest management. Investment
instruments are more easily
traded less permanent and no
controlling stake in an
enterprise.
Sell Off It is more difficult to sell off or pull out. It is fairly easy to sell securities
and pull out because they are
liquid.
Comes from Tends to be undertaken by TNC Comes from more diverse
sources e.g. a small company's
pension fund or through
mutual funds held by
individuals; stocks or bonds.
What is invested Involves the transfer of non-financial assets Only investment of financial
e.g. technology and intellectual capital, in assets.
addition to financial assets.
Volatility Having smaller in net inflows Having larger net inflows

Management Projects are efficiently managed Projects are less efficiently

managed