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University of Latvia Faculty of Business, Management and Economics IMPACT OF MACRO-ECONOMIC FACTORS TO FOREIGN DIRECT INVESTMENT DECISIONS FOR GERMAN AND AUSTRIAN AUTOMOTIVE INDUSTRIES Helmut Birnleitner University of Latvia Aspazijas bulv. 5, Riga, LV-1050, Latvia E-mail address: [email protected] Objective: German and Austrian Companies of the Automotive Industry who are planning to go abroad with production sites are forced by many different influence factors. Internationalization and open markets with low entry barriers made business activities more transparent and the competitive pressure increased. Reasons for Foreign Direct Investments (FDI) are complex and driven by different forces e.g. covering upcoming demands, serve new markets, demand of resources, reducing transports, etc. These circumstances may bring risks and uncertainties for companies and their organizational and financial situation. The objective of this research paper is to evaluate the influence of macro-economic factors to foreign direct investment decisions. It is not the aim of this work to evaluate internal influence factors, such as production processes, products, quality issues, etc. This research paper focuses on to the macro-level and evaluates the influence of external economic factors to the decision process of doing FDI or not. Methods/Data: Factors which affecting FDI decisions, according to literature research, is mainly driven by three different main aspects: Supply Factors, Demand Factors and Government Factors. Each of these factors is set-up by different sub factors, which are as follows: Supply Factor: Production Cost, Logistics, Resource Availability and Access to Technology; Demand Factors: Customer Access, Follow Clients, Follow Rivals and Exploitation of Competitive Advantage; Government Factors: Economic Priorities, Avoidance of Trade Barriers and Economic Development Incentives. Managers and Decision makers of companies have been asked about their allocation of importance and risk to each of these factors for the decision process of doing FDI or not. Results/Conclusions: Macro-Economic factors are of essential importance in globalization processes and influence companies who intent to invest into foreign countries. These factors can be influenced by governmental incentives and stability. As a conclusive summary following results can be derived: Factors such as GDP real growth rate and low tax rates of profit as well as incentives for green buildings are of high importance for FDI decisions. Transparency (stable governmental situations) is also of importance in terms of minimizing risks of FDI decisions. Key words: Foreign Direct Investments (FDI), Globalization, Macro-Economic Factors ______________________________________________________________________________ Latvijas Universitates 75. Conference, Riga, 2017