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Foreign Direct Investment and Fdi
Masters Program for International Development Policy

Foreign Direct Investment
Term Paper - 2010

Attracting Foreign Direct Investment in Nepal

Submitted to: Prof. Hwy-Chang Moon Submitted by: Khagendra Prasad Rijal
Spring 2010

Executive Summary Table of Contents Title Page 1. Introduction 3

2. Foreign Direct Investment: Theoretical Overview 3.1. Market Failure The 3.2. Eclectic Paradigm 3.3. Diamond Model and Imbalance Theory 3.4. Double Diamond Model

3-5

3. Key Determinants Of FDI 5-6

4. Foreign Direct Investment in Nepal 5.5. Key Economic Indicators 5.6. Trends of the Flow of Foreign Direct Investment

6-9

5. Policy Initiatives and Institutional Arrangement for FDI Promotion in Nepal 6.7. Policy Initiatives 6.8. Institutional Arrangement

10-11

6. Assessing the Competitiveness of Nepal 7.9. Environment for Investment and Doing Business

11-12

7. Existing Business Condition and Problems of FDI promotion in Nepal 13-14 8. Prospects of Attracting FDI 14-15 9. FDI Strategies 15-16 10. Conclusion 16-17
References

Abstract

FDI is viewed as an instrument for exploring the resources, promoting industrial growth, enhancing the competitiveness of the domestic firms; and also promoting export particularly in developing countries. FDI maintains relatively open economies, stable macro-economic conditions and limited restrictions on foreign exchange transactions. It frequently stimulates competition, productivity and innovation. Further, it generates income and employment opportunities resulting in higher wages, competitive price, more revenue, skills and technology transfer and increased foreign exchange earnings. Similarly, it enhances entrepreneurial capability when the foreign firms bring with it some firm specific knowledge in the form of technology, managerial expertise, and marketing know-how. It


References: Agrawal, Pradeep, Economic Impact of Foreign Direct Investment in South Asia, Bombay: Indira Gandhi Institute of Development, 2000. Athukorala, P. & Sharma, K, Foreign investment in a Least Developed Country: The Nepalese Experience, Transnational Corporations. Vol. 15, No. 2, 2006. Investment Policy Review Nepal, UNCTAD, 2003 A study of the Foreign Direct Investment & Transfer of Technology in Nepal, IIDS, Kathmandu, 2003. Borensztein, E., De Gregorio, J. and Lee, J-W, How Does Foreign Direct Investment Affect Economic Growth?, Journal of International Economics, Vol. 35, 1998. Hoekman, B. & Saggi, K., Multilateral Disciplines for Investment- Related Policies, Journal of International Business Studies, 1999. Dilli Raj Khanal, Dr. Trade and Investment Linkages in Nepal Institute for Policy Research and Development, 2007. Prema Chandra Athukorala and Kishor Sharma, Foreign investment in a Least Developed Country: the Nepalese Experience, Research School of Pacific and Asian Studies, Australian National University, 2006. Industrial Development Policy, Ministry of Industry, Nepal, 2010. Hwy-Chang Moon & Thomas W. Roehl, Unconventional Foreign Direct Investment and the Imbalance Theory, International Business Review, 2001. World Investment Reports, 2006, 2008, 2009, UNCTAD. South Asia Economic Report, 2007, UNDP.
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