International Financial Management Final Essay

As we can see from Exalt In comparison with Exalt 16. 1 we noticed that the during four-year period 2009-2012, the united States stays as the largest amount of FED inflows. The other most popular destinations of FED flows still include the countries mentioned in the textbook: the United Kingdom, France, China, Canada, Spain, and Germany. These countries still have location advantages for FED. And Japan plays an even smaller role in FED inflows, with average down from 10. 2 billion (2004-2008) to 2. 65 billion (2009-2012).

That means, Japan still has varieties of economic, legal and cultural barriers to foreign investment. However, the component of FED inflows changes among these popular countries, as the textbook mentioned that FED inflows to China had dramatically Increased In 2004-2008, during period of 2009 to 2012, the Inflows keep Increasing tremendously, and China replaced the united Kingdom as the second most popular FED Inflow Just next to the united States. On the other hand, as we see from the average FED inflows of the other popular countries, such as France, the Netherlands, Spain and the united Kingdom reduced dramatically.

I think the reason that China emerged so dramatically in FED inflows is mainly because China has abundant low labor cost and material cost compared to other countries. The labor market of China is around 750 million people; although the average hourly wage Is Increasing, it is still lower than most other markets. Average workers typically earn less than $130 per month. [1] Because of that a lot of companies moved their manufacture to China. For example