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Example research essay topic: Foreign Investment France Vs Italy - 1,015 words

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... states to both inward and outward investment. Government Policy France has put forth a national government effort to create incentives to total French investment, encouraging the development of new markets for French products and investors and increasing global competitiveness. The introduction of the single European market has led to a reduction in economic regulations, however France's traditional intervention mentality in the economy still influences domestic and international business. French government intervenes mostly to help individual firms and sectors become more competitive, taking a more flexible approach to boost international competition. Since 1983, the state's role in the economy has been reduced through privatization and removal of price controls.

In addition, the government seeks to foster growth in both public and private sectors through subsidies, loans, initiatives, and guidance, especially in areas of high technology. All this loosens investment restrictions for both those in quest of inward or outward investment. Of course, reduced control and helpful intervention, comes along with a small price. The government still closely monitors joint ventures in certain industries to ensure national control.

Foreign investors most often cite unnecessary labor regulation and high income and payroll taxes (taxes in Frances are the highest among the seven major industrialized countries) as the greatest disincentive to investing in the French economy. Furthermore, since companies often compensate foreign workers for the extra tax burdens of working abroad, the result can be much higher costs for employing highly skilled expatriate workers to work in operation in the France. Although foreign investors face less interference by the French government, there is still an overwhelming presence of traditional proclivity. There is still a preference for national control of business, as the government retains its involvement in national and local budgets, remaining state holdings of major corporations, and extensive regulation of labor, goods, and services markets. In addition, the French also has a preference for working with French and European rather than US firms. As this thwarts the foreign investor, strict government constraints, may lead many national firms to invest their French assets abroad.

Faced with overwhelming adversaries, the Italian government has been striving to make necessary economic reforms, if it is to compete successfully. Traditionally dominant in the economy, controlling 1 / 3 of all industrial activity and 2 / 3 of banking operations in the early 1990 s, the Italian government has began a massive privatization program in the past decade. In addition, it has reduced spending in efforts to reduce Italy's massive debt. As for incentives, the Italian government has created some enthusiasm for investment in the less developed south.

However, a survey conducted by the Italian Trade Commission suggested a more effective financial incentives system should be implemented as well as better available information about Italian business opportunities. It is also suggested that the government should lower taxes and improve conditions in the South by making efforts to reduce corruption and criminality, lowering the disparity between North and South. Furthermore, although 100 % of foreign ownership is allowed in principle, the share of foreign equity is limited; the government can block foreign mergers with domestic firms to protect its national economy. Industrial projects in general require a multitude of approvals and permits and close scrutiny. Unfortunately, it seems the Italian government, by not doing enough to release its hold on the economy and create better incentives for investors, has created disincentives for inward investment and not given the confidence needed for its own to invest abroad. France and Italy are both two of the world's leading industrial countries.

Both have established stage 4 positions in Dunning's J-curve a long time ago, exhibiting a high pattern of foreign investment in relation to GDP per capita. Although a positive NOI reflects strong OSAs and an increased propensity to exploit these advantages internally from a foreign location, in today's day and age, establishing a global environment by encouraging both inward and outward investment is pivotal to sustaining international competitiveness. France has done a much better job at encouraging a move toward globalization, which is reflected in its superior position compared to that of Italy's on Dunning's J-curve. Exploring both the inward and outward investment positions of France and Italy and reflecting on why the two European nations rank where they do, has led to the following conclusion: a national effort must be made to combat traditional mentalities and structural obstacles in order to lend support and high motivation for both inward and outward investment. Only then can a nation maintain its competitive advantage by exploiting direct foreign investment opportunities while simultaneously encouraging inward investment, and, in turn, increasing competitiveness as a world leader. Works Cited "Developments in individual OECD countries- France. " OECD Economic Outlook 2001.

Vol 2001 / 1. No. 69, June. "Developments in individual OECD countries- Italy. " OECD Economic Outlook 2001. Vol 2001 / 1. No. 69, June. Falzoni, Anna. "The Decision to Invest in a Low-wage country: evidence from Italian textiles and clothing multinationals. " Discussion paper no. 2395. 3 / 2000. Centre for Economic Policy Research.

London. web "France: Country Report Highlights. " Political Risk Services. 1 -Oct- 2000. "France: Country Review 2000 - 2001. " Country Watch. com "France is the ideal base for foreign companies to establish European-wide operations. " Business-in-Europe. com. "France: Key Economic Indicators. " 1999 Country Reports on Economic Policy and Trade Practices. Released by the Bureau of Economic and Business Affairs.

U. S. Department of State, Mar 2000. "Italy: Country Report Highlights. " Political Risk Services. 1 -Oct- 2000. "Italy: Key Economic Indicators. " 1999 Country Reports on Economic Policy and Trade Practices. Released by the Bureau of Economic and Business Affairs. U. S.

Department of State, Mar 2000. "Italy: Country Review 2000 - 2001. " Country Watch. com "Investing in Italy- Potential for growth: Perception of 130 Top US managers. " Italian Trade Commission- NY. web International Economic Trends-France. Federal Reserve Bank of St. Louis. International Economic Trends-Italy.

Federal Reserve Bank of St. Louis. International Financial Statistics Yearbook 2001. Vol.

LIV, 2001. International Monetary Fund. "Northwest Italy's E-aspirations. " Strategic Direct Investor. Jan/Feb 2000. web


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Research essay sample on Foreign Investment France Vs Italy

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