Companies invest overseas for several reasons including accessing new markets, exploiting economies of scale, taking advantage of lower labor costs, and reacting to trade barriers. Foreign direct investment has grown significantly in recent decades and is driven by both macroeconomic factors and companies' strategic objectives. While foreign investment can benefit host countries through job creation and technology transfer, governments must consider incentives and potential drawbacks carefully.

1. Why Do Companies Invest Overseas? Krishna G Iyer Department of Applied and International Economics Massey University, Palmerston North.

4. Relative Importance (USA)

5. Relative Importance (USA)

6. Relative Importance (NZ)

7. Relative Importance (NZ)

8. Growth Rates 2.91 15.00 49.84 10.11 2.69 9.52 13.62 NZ (90-05) 3.17 7.09 15.87 9.71 8.60 22.98 12.70 USA (81-05) GDP OFIO FPIO FDIO OFII FPII FDII C’try

9. FDI as share of GDP FDII and FDIO Flows as Percentage of GDP (1980-2004) 1.35 1.35 World 1.59 1.25 OECD 0.92 3.41 New Zealand 0.99 1.05 USA FDIO Flow as % of GDP FDII Flow as % of GDP Region

10. FDI – Who Invests 0.0042 0.0068 0.0101 0.0109 Sub-Saharan Africa 0.1024 0.1368 0.0800 0.1297 Developing excl. China 0.0004 0.0005 0.0004 0.0002 LDCs 0.0000 0.0000 0.0001 0.0003 Developing Oceania 0.0738 0.0996 0.0382 0.0341 Developing Asia 0.0047 0.0074 0.0112 0.0129 Developing Africa 0.0279 0.0343 0.0330 0.0824 Developing America 0.1064 0.1413 0.0825 0.1297 Developing economies 0.8847 0.8551 0.9174 0.8703 Developed economies 2004 2000 1990 1980 Investors/Sources

11. FDI – Who Hosts 0.0174 0.0187 0.0198 0.0533 Sub-Saharan Africa 0.2232 0.2673 0.1941 0.2470 Developing excl. China 0.0081 0.0066 0.0053 0.0087 LDCs 0.0005 0.0008 0.0015 0.0023 Developing Oceania 0.1436 0.1839 0.1040 0.0960 Developing Asia 0.0246 0.0261 0.0336 0.0757 Developing Africa 0.0821 0.0898 0.0668 0.0751 Developing America 0.2508 0.3007 0.2058 0.2490 Developing economies 0.7268 0.6872 0.7941 0.7510 Developed economies 2004 2000 1990 1980 Hosts

12. The China Story 0.0457 0.0677 0.0092 0.0003 China - ML, HK, Mac 0.0040 0.0045 0.0025 0.0000 China - ML 2004 2000 1990 1980 FDI OUTWARD 0.0794 0.1126 0.0388 0.0472 China - ML, HK, Mac 0.0276 0.0334 0.0117 0.0020 China - ML 2004 2000 1990 1980 FDI INWARD

25. How divergent are labor costs? 0.22 Indonesia 18.35 Italy 0.6 China 20.05 Australia 0.66 Philippines 20.09 Japan 2.48 Mexico 20.37 UK 5.54 Hong Kong 21.13 France 5.84 Taiwan 21.97 USA 10.28 Korea 25.18 Sweden 11.73 Israel 27.73 Belgium 14.96 Spain 31.25 Germany Avg. Hourly Cost (USD) Country Avg. Hourly Cost (USD) Country

28. Average Wealth Gains from Cross-Border Acquisitions: Foreign Acquisitions of US Firms (Eun et al. 1996) 68.18 103.19 -35.01 2.54 1.66 103 All 42.02 89.48 -47.46 2.80 1.63 32 Others -28.36 94.55 -122.91 2.18 1.11 46 UK 398.49 170.66 227.83 4.81 5.08 15 Japan 100.53 85.59 14.93 0.65 0.21 10 Canada Comb. Target Acquirer Target Acquirer Average Wealth Gain in Mn USD R&D as a % of Sales Cases C’try of Acquirer