Open AccessHow Economic Globalization Changes International Investment Decisions
Author(s) -
Alex Pomelnikov
Publication year - 2019
Publication title -
international journal of accounting and financial reporting
Language(s) - English
Resource type - Journals
ISSN - 2162-3082
DOI - 10.5296/ijafr.v9i4.16129
Subject(s) - foreign direct investment , investment (military) , globalization , emerging markets , economics , developing country , capital (architecture) , capital flows , economic globalization , business , international economics , financial globalization , market economy , macroeconomics , economic growth , history , liberalization , archaeology , politics , political science , law
This paper explains the need and development of new economic models to evaluate the possible outcomes of foreign investment. I consider the importance of foreign investment to emerging economies in a global economy, the effectiveness of traditional economic theory to accurately identify and quantify non-financial factors that affect investment outcomes, and the appearance of new economic models to more accurately reflect the complexity of foreign investment.Following an extensive review of publicly available data, I find that capital flows to emerging economies is less than capital flows from developing countries, thereby producing a net loss of productive capacity. I conclude that, despite the use of new economic models, the level of global foreign investments by investor nations will continue to decline over the medium term due to a rise in anti-trade rules and regulations to retain capital and secure domestic employment within the borders of the industrialized investing nations.