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Nobody but China? The countries attracting foreign investors
Foreign investments attraction and coproduction creation involve many positive changes: they lead to transfer of technologies and skills, promote the exchange of researches results, facilitate access to the world market and help the brand promotion, stimulate creation of new workplaces and export growth, provide currency receipts. The competition in global economy demands existence of special conditions promoting attraction of investments from abroad: favorable business environment, transparent legislation, natural resources, inexpensive labor, qualified personnel. Investors are interested in the developed countries with low risks and developing countries capable to provide high profitability.
The USA attracts investors due to stability and low risk. The gross domestic product in the States in 2013 made 16,8 trillion dollars, and the volume of direct foreign investments reached 160 billion dollars. The branches, most attractive to invest in, in the USA are the pharmaceutics and green power. The USA are one of key players on the global pharmaceutical market, defining its development. The policy pursued by the state encourages investments into development of new products by means of tax privileges and subsidies. In 2012 the USA ranked third in the world after Germany and Ireland by the amount of pharmaceutical products export per capita. And by the absolute value of the parameter the States ranked fourth having passed forward Germany, Switzerland and Belgium. We should mark that one of the key trends of pharmaceutical industry of the USA is products transfer to other countries with lower expenses. Production of pharmaceutical production demands considerable investments into researches carrying out and high qualified specialists hiring.
Instability of the world fuel and energy market forces to look for alternative energy sources and makes green power one more direction, attracting investors. In the USA development of the green power using corn as raw materials for bioethanol production affected both the internal, and the world market of grain and oil-bearing crops. Production of wind and solar energy in the States is subsidized by the state that allowed to achieve low prime cost of these energy types.
Since 2001 (the moment of accession to WTO) the volume of direct foreign investments in economy of China increases annually. China attracts foreign investors with the growing domestic demand, the increasing labor quality, rich natural resources, and also rather low energy costs. The internal gross product in China in 2013 made 9,2 trillion dollars. The volume of direct foreign investments reached 117,6 billion dollars If initially the main stream of foreign investments went to production, recently investors became interested in services and telecommunications sector, besides, the sphere of scientific development develops actively. The state encourages development of hi-tech products. However in 2014 funds inflow from abroad slowed down. High inflation of salaries, difficulty in labor providing, the high competition between the companies became negative characteristics of the country.
Growth of salary and economy delay in China forces producers to look for new investments directions in other Asian countries. Popular recipients are India, Indonesia, Thailand, Vietnam, Hong Kong, Singapore.
India and Indonesia attract investors due to great population number, providing the essential volume of the domestic market. Besides, Indonesia, as well as Thailand, shows quite high investments profitability.
Vietnam differs favorably with low expenses on compensation. Vietnam also showed socio-political stability and annual economic growth for the last twenty years. Besides, after accession to WTO in Vietnam reforms were carried out promoting the legislation transparency increase, as a result in 2013 inflow of direct foreign investments exceeded 22 billion dollars, having increased by more than 35% compared to 2012. Nevertheless in Vietnam investors still face such problems as poorly developed infrastructure and shortage of the qualified labor.
Indisputable advantages of Hong Kong are: strategic situation which makes the island the gate for access to the Chinese market; status of the free port; simple and stimulating tax regime; effective infrastructure. For the attraction of PII the government of Hong Kong provides access to cheap lands for such spheres as medicine and creative industries (advertising, architecture, art, design, fashion, music, R&D, production of the software and other).
As for the branch structure, investors in India choose non-financial and financial services, heavy and light industry; in Indonesia — enterprises of heavy and light industry; in Hong Kong — investment holdings, services in real estate and other services, banks and deposit companies, wholesale and retail trade; in Vietnam the sectors demanded by investors include investigation and development of oil fields, oil refining, production of electronic products, construction materials, textiles, information technologies.
Foreign investments can not only cause positive economic and social effect within the country, but also promote integration of economy with the world. Therefore attraction of foreign investments is the priority direction of the external economic policy of many countries.