Foreign Direct Investment as a catalyst for Economic Growth and its impact on Belize

Presented by:Vera CusDylan SmithKenisha TillettStevaughn ArnoldLincoln YoungCecil Arnold

What is Foreign Direct Investment?

•Foreign Direct Investment (FDI) is a ..

Direct investment into production or business in a country by a company of another country.

Typically, this is done by acquiring shares in the locally established enterprise or by investing and establishing fresh ventures in the (host state) in this case Belize.

Background

•Foreign direct investment (FDI) is often seen as an important catalyst for economic growth in the developing countries.

•Foreign investors have the capital to invest in different businesses which can be very difficult for our local investors who are for the most part limited with minor amounts of capital.

Statement of the problem

•Investor’s confidence is very important for foreign investors because it allows them to be aware of where the company they plan to invest in stands in the economy and what their expectations are for the future.

•Political risk is dominant in making decisions; that is one of the major contributing factors that can scare an investor away.

Objective of the study

To determine why Belize need to adapt Foreign Direct Investment and identifying the advantages and disadvantages of FDI. To compare the GDP per capita growth between the years of 1980 and 2010 in Belize. To study the incentives provided by the Government to facilitate FDI.

Foreign Direct Investment in Belize is a major external source to meet obligations of resource gap, human resource development and goal achievement.

No debt creation on the part of the government.

Improves efficiency of resources.

Increases productivity and competitiveness

Why FDI?

The Investment Process – Investor’s Decision

Is the country on the investor’sradar?

What is the country’s market size/what markets does thiscountry have access to?

What is the investmentclimate like?

Can I build a profitable business?

How does this countrycompare too therecountries?

What is the time it will takeme to get up and running?What can I get from investing in that Country?

It allows money to freely go to whatever business has the best prospects for growth anywhere in the world.

Infrastructure and technology transfer increased productive efficiency due to competition from multinational subsidiaries.

Increase in saving and investment Employment Consumer benefit

Advantages of FDI

Disadvantages of FDI

Large giants of the world try to monopolies and take over the highly profitable sectors.

Such foreign Companies invest more in machinery and intellectual property than in wages of local people (employees)

TYPES

Horizontal FDI: investment in the same industry abroad as a firm operates in at home.

Platform FDI: a source country into a destination country for the purpose of exporting to a third country.

Vertical FDI: it take place when a firm through FDI move upstream or down stream in different valve chain i.e, when firms perform valve –adding activities stage by stage in a vertical fashion in a host country.

There are three types of FDI

The FDI has played a vital role in the economic growth in Belize. Some of the major revenue generators in Belize today are:

TourismAgriculture and agro-processingInternational financial servicesManufacturing (furniture, construction materials, wood and paper products, etc.)

Methodology

•Some of the data used in the research paper is from the World Development Indicators 2009 of the world bank.•Secondary data were used to put together the research paper, so the accuracy of the findings depends on the reliability of the available information.•This study mostly is focused on previous literature, reports and data found on the Google sites which are mentioned on reference page.

Research HypothesisHow is FDI benefiting the country of Belize?

The Effects FDI's on Belize's GDP over the PASS decade?Other Info: when comparing GDP per capita growth between the years of 1980 and 2010, Belize falls among the lower ranking countries such as St. Kitts and Nevis and Haiti (World Bank Data 2010). Note graphical illustration on next slide

Incentives to FDI

COMMERCIAL FREE ZONES - The Commercial Free Zone Act 1994 was established to attract foreign investment and provides for various activities including manufacturing, processing, packaging, warehousing and distribution of goods and services.

EXPORT PROCESSING ZONES ACT- Program attracts both local and foreign investments to boost production for export markets with a focus on manufactured goods and non-traditional agricultural products.

The Growth Rate Of FDI

Conclusion

In this paper, the relationship existing between Foreign Direct Investment and Economic growth in Belize drawing the following conclusions: The populations its self is growing and as it grows, investors tend to see different business ventures here in Belize and doesn’t mind investing in us because, they see it as a form of growth.

RecommendationsTake steps to reduce the time to:• Start a business• Get construction permits• Register a property• Address the issues of crime, government bureaucracy, work ethic and productivity, corruption• Focus on improving the services sector• This is a significant part of GDP• One of the areas which is attracting more FDI• Tourism is becoming more important – limited by current room stock

References

http://www.balamescape.com/Investment/WhyinvestinBelize/PoliciesandIncentives.aspxhttp://belizeinvest.net/category/foreign-direct-investment/http://amandala.com.bz/news/belize-foreign-direct-investment-doubled-2012-repatriation-rates-remain-high-eclac/

Conclusion•Foreign direct investment (FDI) plays an extraordinary and growing role in developing countries like Belize.

•It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing

Thanks For Watching I hope you have learn something from the presentation