LBPG5018: FDI Inflow and Infrastructure Comparison Report

This report investigates the crucial relationship between Foreign Direct Investment (FDI) and infrastructure and their impact on economic growth. It begins with an introduction to FDI and its significance, followed by a literature review that explores the FDI landscapes of the UK and BRICS nations. The report then examines the interrelation between infrastructure and FDI, critically evaluating the impact of infrastructure on attracting FDI. A detailed research methodology, including data collection and analysis methods, is outlined. The report concludes with a discussion of the business and managerial implications of the research, limitations, and ethical considerations. This research aims to compare the economic growth of the United Kingdom with the BRICS economy for determining the effect of the FDI on the country and identify the relation between the FDI and the infrastructure.

Running head: FDI Inflow and Infrastructure
FDI Inflow and Infrastructure
Name of Student
Name of the University
Author note

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Abstract
The economic growth as well as stability is vital for every single country. Foreign direct
investments have a major role play in enhancing the economic development of the country.
The foreign direct investments (FDI) are the investment process, where an organization from
one country in a particular business which it controls in another country. Furthermore, the
foreign direct investment is highly influenced by several factors, but the vital among them is
the infrastructure. This research paper intended to explore the interrelation between the
infrastructure and the FDI along with the effect of infrastructure on the FDI by comparing
several statistics from United Kingdom and the BRICS.
Keywords: Foreign direct investment, FDI, BRICS, infrastructure, Economic growth,

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Table of Contents
1 Introduction.............................................................................................................................3
1.1 Introduction.................................................................................................................3
1.2 Background statement.................................................................................................3
1.3 Research Aims and objectives.....................................................................................3
1.4 Research questions......................................................................................................4
2 Literature Review...............................................................................................................4
2.1 FDI of the UK and BRICS nations..............................................................................4
2.2 The interrelation of infrastructure and the foreign direct investments........................6
2.3 Critical evaluation of the impact of infrastructure on the FDI....................................6
3 Research Methodology.......................................................................................................7
3.1 Data collection methods..............................................................................................7
3.2 Data analysis methods.................................................................................................8
3.3 Sample Size.................................................................................................................8
4 Business and/or managerial implications of your research................................................8
5 Limitations of the proposed study......................................................................................9
6 Ethical issues and considerations........................................................................................9
7 Conclusions.......................................................................................................................10
8 Research schedule.............................................................................................................11
9 References.........................................................................................................................12

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1

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1 Introduction
1.1 Introduction
There exist one strong inter relationship among the economic growth and the foreign
investment. In order to gain a sustainable economic growth, concentrating towards larger
foreign investment inflow is necessary. Moreover, for achieving global success, ensuring
successful economic growth is important for every country. Moreover, the capital from the
foreign investment are comparatively risk free and can bring technological advantages for the
country (Blonigen and Piger 2014). However, it is vital to ensure one effective and
sustainable climate of investment to achieve the desired amount of economic growth.
1.2 Background statement
The concept of FDI has been proven as one vital impeding factor in case of the
economic growth as well as development of the country (Mathur and Singh 2013). According
to the previous researches, the lack of sufficient foreign investment can majorly hinder the
country’s economic growth. Furthermore, the investments which an organization forms one is
the subsidiary in the foreign country or acquires a substantial controlling in the interest of an
abroad firm and continue ahead to define the same in current times, it has grown rapidly in
compared to the international trade (Holmes et al. 2013).
1.3 Research Aims and objectives
This research aims to compare the economic growth of the United Kingdom with the
BRICS economy for determining the effect of the FDI on the country. The economic
condition of the United Kingdom has been market driven as well as highly developed. The
country has registered having the fifth largest economy in the world. According to the reports
provided by the UNCTAD world investment, the United Kingdom is the third highest
destination of the global foreign direct investment flows after United States and China.

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However, the chosen country has evidenced a year to year degradation in the FDI and
infrastructure is considered as one of the major reason for the fall of FDI. Therefore, this
particular paper will compare the United Kingdom economy with the BRICS to identify the
relation between the FDI and the infrastructure. The research objective are as follows;
 To understand the FDI of the United Kingdom and the FDI in BRICS
 To explain the interrelation of infrastructure and the foreign direct investments
 To critically evaluate the impact of infrastructure on the FDI.
1.4 Research questions
After analysing the chosen topic and research objectives, the below questions have arisen;
 What is the foreign direct investment of the United Kingdom and the BRICS nations?
 What is the interrelationship between the infrastructure and the foreign direct
investments?
 How the infrastructure is impactful for the FDI?
2 Literature Review
2.1 FDI of the UK and BRICS nations
FDI can be described as the process of investments made by any organization or else by
an individual or group of individuals in a country into the business interest present in any
other country. Usually, the foreign direct investment occurs when any investor establish any
kind of foreign business operations or gains any foreign business assert including controlling
the interest in a foreign company (Lehnert, Benmamoun and Zhao 2013). However, the FDIs
are different from the portfolio investment, where the investors purchase the equities of any
foreign based organizations. Moreover, the FDI are usually conducted in the economies

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which can offer an efficient workforce and more than average growth prospects for the
associated investors. More than just including the capital investment, the foreign direct
investment also includes technologies and the provision of management (Lall and Narula
2013). The vital intention behind the process of FDI is to establish substantial influence as
well as effective control on the decision making process of the foreign business (Blonigen
and Piger 2014). After United States and China, the United Kingdom has become the third
largest destination of the global FDI flow. However, the process of Brexit created several
concern among the investors regarding the increasing trade costs with Europe (Dhingra et al.
2016). The vital foreign direct investment partners of United Kingdom are, Japan, Jersey,
Luxembourg, France and United States. Most of the FDI flows are implies towards the
machinery products, financial services, waste sectors, trade and repair, energy sectors as well
as the service related activities. However, as per the current business ranking the United
Kingdom stands 9th out of the 190 economies in the world, losing two points as compared to
the past years. The reason behind having comparative less rank in the FDI might be the heavy
contribution of the UK based financial sectors to the Gross Domestic Products, less
investment in the infrastructures and the less productivity growth of the country and many
others (Hill and Munday 2016). Furthermore, the foreign direct investment indicates the cross
border investments made by several business or resident from one country to any other
country, with an intention of establishing one effective and lasting bond between both the
countries (Blonigen and Piger 2014). Moreover, the foreign direct investment asserts capture
all the investment made by several United Kingdom based company in abroad. On the other
hand, the liabilities of the foreign direct investments cover all the investments in the United
Kingdom made by different foreign organizations. Furthermore, the statistics over the FDI
inflow are comparatively wider than the earnings and the debt transactions that involve
affiliates within the multinational companies and also include the change in debt, share

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holdings and the reinvested earnings. Discussing about BRICS, it is an association of five
emerging economics in this world, that is, Brazil, Russia, India, China and the South Africa.
Though all the five countries are recently industrialized countries; yet they are differ in terms
of their economies, global and regional affair along with the several individual significant
influences. The BRICS nations have a combined GDP of US $ 16.039 trillion and due to
these factors the BRICS countries are said to be the major destination of the FDI inflow
(Nistor 2015).
2.2 The interrelation of infrastructure and the foreign direct investments
The FDIs are responsible for enhancing the economic growth and development of the
country by improving the formation of the domestic capital along with the enhancement of
the new technologies (Forte and Moura 2013). Over the past two decades, the process of FDI
has been expanded rapidly. A vital part of the increased FDI in the service sectors has
become the improvement in the private capital flow for the infrastructure in relation to the
general trend in the direction of privatization of the infrastructure in several developing
countries. Moreover, for the smooth running of the foreign business or the foreign affiliated
product, service and the trade activities, the quality, availability and amount of the supportive
infrastructure is vital (Nourzad, Greenwold and Yang 2014). Best infrastructures can surely
decrease the overhead costs that put positive impacts on the location decision of the investors
(Mathur and Singh 2013).
2.3 Critical evaluation of the impact of infrastructure on the FDI
Expanding the infrastructure based measures in case of the government expenditure over
the communication and transportation improves the inflows of the FDI in the host country
(Kurtishi - Kastrati 2013). A qualitative infrastructure is vital determinant for the FDI. On the
other hand, the country that has opportunity for attracting the inflow of FDI will surely
simulate the country to equip with better infrastructure facilities (Shah 2014). Moreover, the

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availability of the essential and qualitative infrastructure is considered by including
telecommunication, transportation, electricity and water. Therefore, the existing government
must focus on the expenditure of the capital in order to acquire the intangible assets, fixed
capital assets, land as well as the non-financial as well as the non- military assets for the
infrastructure. Infrastructure has a greater impact on the FDI, and the infrastructure is directly
proportional to the inflow of the foreign direct investment. In the foreign direct investment,
the concept of infrastructure can be explain by the water supply, the uninterrupted power,
total number of metalled road, number of sea, rail networks, international airports,
technologies as well as the telecommunication destinies. However, using the
telecommunication destiny as one infrastructure is still debatable; yet, the growth and
emergence of the transnational corporations to the current level seems very inconceivable
without a proper communication infrastructure present at the international level.
3 Research Methodology
According to Flick (2015), the research process have encompassed by three vital
dimensions such as, ontology, epistemology and the methodology. Approaches of the
research are connected to the paradigms as the deductive approach is taken by the positivists,
whereas, the inductive approach is taken by the constructivists. However, a single research
can use both of these approaches. The above discussed research will hence apply the
positivism as well as the deductive method for dealing with all the imperial data for finding
out the relation between the FDI and the infrastructure. In order to carry out the research
smoothly, putting high emphasis on the research methodology is necessary.

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3.1 Data collection methods
This study will encompasses both the type of data, which are the primary as well as the
secondary data sources. The primary data can be gathered by considering several different
sources such as surveying as well as interviewing the samples (McCusker and Gunaydin
2015). In contrast, the secondary data can be gathered from the previously available data,
which are the data available in the online platforms or any kind of printed form (Berthiaume
et al. 2014). Therefore, in order to conduct thE research, both the primary and secondary of
data will be taken into consideration.
3.2 Data analysis methods
The data analysis method can be conducted by analysing all the quantitative data that
are gathered during the survey and interviews; which simply defines the transformation of the
collected survey data into one numeric format or else a percentage format. Conversion of the
surveyed data into a numeric format will give a better comprehensive view to the same data
(Almalki 2016). Furthermore, these converted quantitative data will again convert into some
graphs or chats for providing a pictorial or graphical representation to the same. The data
analysis method will also encompass the qualitative data; these are the data or information
gathered from several client history, census, government publications or analysing the service
records related to the chosen topic (Cope 2014). Therefore, to provide an appropriate data
support to the research, both the quantitative as well as qualitative data analysis are vital.
3.3 Sample Size
The sampling method of this research will encompass both type of samples those are
the non-probability as well as the probability samplings. Apart from that, several other
random samples will also be taken into consideration in order to create better understanding
that will give a strong support to the research topic.

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4 Implications of business and/or managerial on the research
A business or managerial implication implies a clear comparison between the results
with the action standard and indicate which action are necessary to be undertaken for the
success of the research. The managerial implications majorly emphasize on every evidences
that are given in the report rather than emphasizing on the implication process of the results.
Discussing about the orders, the business or managerial implication always flow straight from
the objectives by summarizing the answers to the asked questions and gathering the evidence
to support the answer (Lerro and Schiuma 2013). Moreover, the concept of managerial
implication might also identify all the additional information required for greater certainty.
Apart from that, it also give an idea about the limitation or caveats regarding the results such
as timeliness, quality as well as amount of the data.
5 Limitations of the proposed study
No matter how efficiently the research is planned and conducted, there may exist some
limitation to the research. As the research is based on finding the interrelation between the
FDI and the infrastructure, collecting appropriate amount of data might take more amount of
time than expected. Sometimes, insufficient resources also cause hindrance to the research.
However, the qualitative data related to the research, such as the data collected from the
World Bank, UNCTAD, and IMF will definitely become beneficial for the research.
6 Ethical issues and considerations
This research intended to strictly follow all the ethics, rules as well as regulations that
are necessary for conducting it. The process of collecting all the primary data will be
conducted by asking the voluntary participation of all the samples without putting any kind of
pressure or force on them (Castellano 2014). Apart from that, this survey paper will not
acquire any kind of company symbol, stamp or else logo attached to it the paper.

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Furthermore, the confidentiality as well as anonymity of every single participated sample will
be maintained in order to avoid any kind of future organizational issues. In addition to that, in
case of collecting the secondary data, the necessary referencing will be given in order to
avoid any kind of ethical issue or plagiarism issues. Moreover, this particular research is
vacant from the subjects related to human; therefore, confidentiality issues might not occur.
As it is based on the FDI analysis of the United Kingdom, it will surely obey the code of
conduct stated by the data protection Act 1998 of UK, which will ensure all the data will be
used accurately.
7 Conclusions
In presence of a huge domestic market, the economic development as well as
liberalisation exerts an impactful and positive influence. The foreign direct investments are
considered to be the vital factors in case of the economic development and growth of the
country. These investments provide the benefits of controlling the ownership of a particular
business in one country, while the origin of that business is present in one different country.
There exist several factors by which the foreign direct investment can be influenced;
however, infrastructure is the vital factor that majorly affects the process of FDI. The United
Kingdom has been registered as having one of the biggest economies in the world; however,
downfall in the infrastructure resulted in the decrease in the foreign direct investment of the
country. Understanding what covariates is essential for driving FDI to the makers of policy as
they might make their policies for the enhancement of these covariates, hence, making their
own country an delightful hub of FDI. The infrastructure has become one of the covariates
and unfortunately; in economic sphere its position is still controversial. This research will

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analyse the pre-existing data from United Kingdom and BRICS nations in the bid foe
examining the relationship and effect of infrastructure over the FDI.
8 Research schedule
The schedule of this research has been demonstrated by the below Gantt chart. The chart is
prepared up of the timelines of all tasks and activities incorporated in this dissertation.
0-2 3-6 7-8 9-10 14th
Research
Activities
Weeks Weeks Weeks Weeks Week
Selection of the
Literature Review
Collection of the
required data
Analysis of the
collected data
Submission of the
final thesis
(Figure 1: Gantt chart representing the research time or schedule)

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9 References
Almalki, S., 2016. Integrating Quantitative and Qualitative Data in Mixed Methods
Research--Challenges and Benefits. Journal of Education and Learning, 5(3), pp.288-296.
Berthiaume, G.H., Caballero, A.M., Cairns, J.A., Havens, W.H., Koziol, T.J., Stewart, J.W.,
Wang, Y.P. and Yeakley, D.D., Hand Held Products Inc, 2014. Methods and apparatus to
change a feature set on data collection devices. U.S. Patent 8,635,309.
Blonigen, B.A. and Piger, J., 2014. Determinants of foreign direct investment. Canadian
Journal of Economics/Revue canadienne d'économique, 47(3), pp.775-812.
Castellano, M.B., 2014. Ethics of Aboriginal research. Global bioethics and human rights:
Contemporary issues, 273.
Cope, D.G., 2014, January. Methods and meanings: credibility and trustworthiness of
qualitative research. In Oncology nursing forum (Vol. 41, No. 1).
Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., 2016. The impact of Brexit on
foreign investment in the UK. BREXIT 2016, 24, p.2.
Flick, U., 2015. Introducing research methodology: A beginner's guide to doing a research
project. Sage.
Forte, R. and Moura, R., 2013. The effects of foreign direct investment on the host country's
economic growth: theory and empirical evidence. The Singapore Economic Review, 58(03),
p.1350017.
Hill, S. and Munday, M., 2016. The regional distribution of foreign manufacturing
investment in the UK. Springer.

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Holmes Jr, R.M., Miller, T., Hitt, M.A. and Salmador, M.P., 2013. The interrelationships
among informal institutions, formal institutions, and inward foreign direct investment.
Journal of Management, 39(2), pp.531-566.
Kurtishi-Kastrati, S., 2013. The effects of foreign direct investments for host country's
economy. European Journal of Interdisciplinary Studies, 5(1), p.26.
Lall, S. and Narula, R. eds., 2013. Understanding FDI-assisted economic development.
Routledge.
Lehnert, K., Benmamoun, M. and Zhao, H., 2013. FDI inflow and human development:
analysis of FDI's impact on host countries' social welfare and infrastructure. Thunderbird
International Business Review, 55(3), pp.285-298.
Lerro, A. and Schiuma, G., 2013. Intellectual capital assessment practices: overview and
managerial implications. Journal of Intellectual Capital, 14(3), pp.352-359.
Mathur, A. and Singh, K., 2013. Foreign direct investment, corruption and democracy.
Applied Economics, 45(8), pp.991-1002.
Mathur, A. and Singh, K., 2013. Foreign direct investment, corruption and democracy.
Applied Economics, 45(8), pp.991-1002.
McCusker, K. and Gunaydin, S., 2015. Research using qualitative, quantitative or mixed
methods and choice based on the research. Perfusion, 30(7), pp.537-542.
Nistor, P., 2015. FDI implications on BRICS economy growth. Procedia Economics and
Finance, 32, pp.981-985.
Nourzad, F., Greenwold, D.N. and Yang, R., 2014. The interaction between FDI and
infrastructure capital in the development process. International Advances in Economic
Research, 20(2), pp.203-212.

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Shah, M.H., 2014. The significance of infrastructure for FDI inflow in developing countries.
Journal of Life Economics, 1(2), pp.1-16.

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