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M3D1: International Trade and Political Influences

What is the authors major concern about measuring FDI?

Provide three examples of policy instruments that governments can use to influence FDI.

Does his analysis provide sufficient evidence to answer the question of whether the world

should adopt a standard methodology for measuring and reporting FDI? Include an

analysis of the benefits and costs (the downside) of FDI. Provide specific supporting

evidence of why or why not.

Authors Main Concern

The main concern that Kerner (2014) raises in the assessment and testing of the use of the

Foreign Direct Investment (FDI) data as a measure of the political science theories influencing

the process, there is always a tendency of the theorized phenomena introducing bias. In turn, the

bias introduced by the phenomena ends up complicating the hypothesis testing undermining its

authenticity. The measure of the FDI as the "right measure" towards the political science theories

influencing the International trade requires the players to reach a certain level of objectivity to

cover a broad range of empirically and conceptually distinct phenomena in which the politics

take the main course to determine the level of FDI directed towards the nation states.

Policy Instruments that Governments can use to Influence FDI

The Policy Instruments (PIs) that governments use to influence FDI are strictly attributed

to the comprehensive national agenda to promote and create more awareness of the current

opportunities I the country for the FDI to take advantage of impacting to increase economic

development. The main PIs is categorized into four significant areas including strategy and

organization, facilitation, lead generation, and investment services.

The strategy and organization entail the development of the national policy context to

guide and manage the FDIs, which involves the inter-ministerial co-operation, setting and

prioritizing FDI objectives, implementing the framework of operating FDI investment

promotion. In turn, create a competitive position among other nations aiming for the same FDIs

(Bartels, 2009). The lead generation puts in place measures to market the country and create

more awareness among the investors on the existing opportunities that they can utilize. The

facilitation PI entails the government engagement with potential investors, companies, and

fanciers to illustrate the mechanism laid down to enhance their operations in improving the FDIs.

Lastly, the investments services as a PI entails the government defining the opportunities in the

country that the investors ought to sup and commit their funds for substantial profits in the

future. The combination of the PIs provides an effective playground where FDIs can be

increased exponential for the level of the country's attractiveness.

Adoption of a Standard Methodology for Measuring and Reporting FDI

According to Kerner (2014) in his arguments on whether there should be an adoption of a

standard method for measuring and reporting FDI. Kerner (2014) concludes by asserting the

"political science theories about FDI speak to such a broad range of empirically and conceptually

distinct phenomena that conflating them as FDI' does a disservice to the complexity of the

topic (Kerner, 2014). In short, he fails to find a standard methodology for measuring and

reporting the FDI across the world in respective countries and the political structures, theories,

and influences in distinct places differ significantly. This asserts that the political science

theories as the primary aspect of measuring the FDI vary from one region to another. Thus, it

lacks a common basis of operation, hence, introducing the bias that complicates the hypothesis

testing from the word goes in measuring the FDIs.



Bartels, F. L., & De Crombrugghe, S. A. (2009). FDI policy instruments: advantages and

disadvantages. United Nations Industrial Development Organization.

Kerner, A. (2014). What We Talk About When We Talk About Foreign Direct Investment.

International Studies Quarterly, 58(4), 804-815.