Nick Leeson’s strategy to earn trading profits on derivatives?

Nick Leesons scheme to earn occupation boodle on derivatives?Originally, trader Nick Leeson was supposed to be exploiting low- chance arbitrage opportunities that would supplement price differences in similar equity derivatives on the capital of Singapore coin Exchange (SIMEX) and the Osaka Exchange. In fact, he make up a strategy to earn trading shekelss on derivatives where he would catch to bump off much put on the lineier positions by buying and selling different amounts of the contracts on the ii flips or buying and selling contracts of different types. Leeson was speculating wildly and completely with fall out authorization, in massive amounts on movements in the Japanese stock and bond commercialiseplaces.Leesons trading activities in the main involved three risings food markets Futures on the Japanese Nikkei 225 stock might, futures on 10-year Japanese Government bonds (JGB futures) and European futures. Leeson executed a trading strategy known as a run, wi th the objective of making a profit by selling put and call options on the same key pecuniary instrument, in this case, the Nikkei 225 Index. Most of his trading was a bet on the volatility of the capital of Japan stock and bond markets. In his futures positions, he was dissipated that the Tokyo stock market would rise and the bond market would fall. He was long Nikkei 225 futures, short Japanese regime bond futures, and short both(prenominal) put and call options on the Nikkei Index. He was betting that the Nikkei index would rise, even so he was wrong instead it fell, causing him to lose $1.39 billion.A straddle will generally produce positive earnings when markets argon fixed except can result in puffy losings if markets are volatile. He planned his strategy taking into consideration the Japanese futures market as in Japan the brim is blank spaceed on a net basis for all costumers and if thither are nodes who are in short position, faithful can blast long positio n without distributively need to pay the call margin. He utilized this opportunity through with(predicate) his phoney actus reus notice 88888 and companies account 99002.What went wrong that ca utilise his strategy to ruin?Leesons strategy failed because he was taking into consideration that the market hadexperienced an elongate bull run throughout the late 1980s and after that, it had locomote tohalf of its 1989 high. He thought that it had fallen enough and from now it would only(prenominal) go up, and he continued to bet that it would rise but the Nikkei 225 index only kept falling. Leeson further augmentd the size of his percipient positions even out as his losings ontogenesisd collectable to volatility in the markets. He did noaffair to hedge his position to lay off his potential losings if the markets did move the wrong way. In effect, Leeson was accepting unlimited li ability.The second thing that was that he was relying on the bank interest rate that it would d ecrease but eventually the exact reversal happened and the interest rate increased to a high. He thought if that the interest rates were low at the second gear and if they were going to rise they would hurt him as more of the investors would move towards serious earning through the high interest rate returns, making the investment into market to reduce and hence to make himself on the safer side he invested into government bonds futures.Nick Leesons doubling strategy failed because he increased the size of his open positions even as his losses increased due to volatility in the markets and kept doubling his contracts whilst the Nikkei 225 continue to plummet following an earthquake in Japan. However, Leesons unauthorized trading positions suffered huge losses, and his operation unraveled. Moreover, interest rates did not rise as he expected which introduce to further losses incurred on the Japanese government bond futures. He left the fanny with huge liabilities totaling $1.4 b illion, leading to the bankruptcy to the one of the oldest bank in Britain. wherefore did Nick Leeson establish a simulated error account (88888) when a licit account (99002) already existed?Nick Leeson set up a bogus error account (88888) even when a decriminalize account (99002) already existed, in order to conceal his unauthorized trading activities. Initially he claimed that he opened the error account (88888) to conceal a champion loss of 20,000 pounds sterling that had resulted from an accounting error until he could make up the difference through trading. However, he continued booking various losses into the error account (88888) as a holding area for any(prenominal) premiums or losses that he made and as well as continued to increase his volume of trading and level of risk taking. It was a loophole he ill-used to set up bogus accounts for non-existent clients to mask mounting debts.While the legitimate error account was known to exposes Securities in London, the bogu s account was not. However, the bogus account was known to SIMEX as a customer account, not as an error account. In this way, Leeson could hide his balances and losses from London but not Singapore. One the separate hand, SIMEX thought the bogus error account, 88888, was a legitimate customer account rather than a proprietary Barings account. The account enabled Leeson to take advantage of the rules of Japanese Futures market at that era. In Japan margin was posted on net basis for all customers. Therefore if many customers were short index futures, the firm could take long position without having to post cash margins.Why did Barings and its auditors not percolate that the error account was used by Leeson for unauthorized trading?The reason why Barings and its auditors did not discover Leesons unauthorized trading and fraudulent activities was mostly a lack of inbred checks and balances, and because Leeson was hiding in Barings organized chaos. Leeson was likewise given power due to his knowledge and in that respect was no inquiry through into his trading undecomposed because he reported a profit to the company. Barings was impressed by Leesons achievements which lead them not to disclose to SIMEX that he infact had been disqualified from taking the UK traders exam (Broady, Roland, Woods, 2008). gibe to Ron Baker, the Head of Financial Products Group for Barings, There were no clearly hardened down reporting lines with regard to Leeson, and in actual fact, on that point were some(prenominal) people answerable for keeping an eye on Leesons performance, but each one of them assumed that the other was watching closer than them, in that respectof allowing Leeson several(prenominal) holes to get through.An internal auditor audited the Singapore office of Barings in 1994 and he reported that unauthorized trading could grow happened because of the fundamental principle of the fabrication segregation of front and back office activities. The results were disclosed to the directors as intumesce as some of the auditors recommendations, but the directors did not implement these recommendations (Collier Agyei-Ampomah, 2006). Moreover, Leesons actions could have been avoided if the Barings executives had make a comprehensive review of Leesons funding requirements, as well as set restrictions to what Leeson could or could not do. However, he also discovered that none of these changes to the internal structure had been implemented when the bank collapsed.One of the main reasons why Leeson was able to get away with so much was that there was no clear segregation of duties (Broady, Roland, Woods, 2008). The nature of the Japanese futures market at the time did not require telephone exchanges to have a separation between the customer and the proprietary finances, which made it difficult to separate the funds and the position of the firm or customer.Leeson was left to be in control of everything that should have been suss out by a s uperior or coiffer of some other de component partment, which enabled him to track and modify the contents of his rogue account as he wished and keep his activities from being disclosed.Although the Director of BFS and the Finance Director of BSS, Simon Jones, pledged to the universe that he would attend to the issue of segregation, he never actually took any action to separate Leesons front and back office doings. The shore of England made a report on the matter and according to the report, the London of age(p) comement actually considered Jones to be an inadequate communicator, and were concerned with the fact that he was not as involved as he should have been in the affairs of BFS. Furthermore, the camber of London also criticized the process of Leesons funding.Firstly, credit checks should have been performed on the prodigious amounts of funds changing hands, but this was not performed either. Secondly, slang of London discovered that there was no clear record of whether the funds reported were needed for its clients, or for its own accounts. This made reconciliation to the highest degree impossible. The trading account was also not shown on any files or statements transmitted from Singapore to London, and and so auditors could not find any conception of the error account.Moreover, SIMEX reason the 88888 account as a customer account rather than an error account.Internally, Barings had raised issues about having proper reconciliation in 1992. The risk manager of Londons branch, Gordon Bowser, had brawnyly recommended a development of a red-blooded reconciliation process. However, Bowser left both others (Simon Jones and Tony Dickel) who had internal conflict over Leeson, to determine on the matter of reconciliation procedures, there was no solid transcription between the two and Leeson was left to create the procedures for himself, allowing him to dictate the way he managed things. The loss of reconciliation meant that auditors could not tr ace the nature of these funds and thus they were unable to uncover the error account that Leeson used for his tradings.Over the years, there were several cases of internal conflict which was beneficial to Leesons stealthy activities. A circumstance example of this was in 1995, where SIMEX became apprehensive about the ability of Barings to meet its large margins in Leesons error account. SIMEX addressed a letter to Simon Jones, with the letter noting that a further $100 million should have been in account 88888. sooner of addressing the matter himself directly, Jones passed the letter to Leeson for Leeson to draft a response on his own.Lastly, when Leesons activities were finally being caught on by SIMEX, but they had not managed to find out exactly what was happening, SIMEX posted another letter to the Singapore branch, expressing doubts about Barings ability to fun margin calls. The letter was then referred back to London and from there SIMEX was assured that opposite positions were being held in Japan. However, the equity was no opposite positions were being held and SIMEX officials made no follow-up checks with Osakas Stock Exchange to demonstrate the claims.Why did none of the regulatory authorities in Singapore, Japan, and the United estate not discover the true use of the error account?none of the regulatory bodies of Singapore, Japan on the UK discovered the true use of Leesons error account because firstly, it was visible to them only as a customer account, and SIMEX had also granted an exemption on the number of contracts that Barings could hold with the presumption that Barings was hedge and not speculating. This is in fact due to Barings conservative firm reputation, which lulled exchange and clearing houses into a false sense of security. Additionally, Barings speculative position was hole-and-corner(a) with the use of an omnibus account and with this account, the brokers customers identities could successfully be hidden from the exchange and clearing houses.A number of happenings in the UK also allowed Leeson to hide and manage his activities easier. At that time, the Bank of England had a rule known as the largish pictorial matter Rule which stated that a bank is unable to add together more than 25% of its capital to any single entity. Barings made a request to Bank of London for an exception and argued that one exchange should not be classified as one entity. The supervisor in take of Barings activities recognized the argument and the request and promised to review it and in the meantime, he offered Barings an unceremonious grant for Japan, which Barings extended to Singapore and Hong Kong. On the matter of the Large Exposure Rule, the supervisor failed to respond until one whole year later, and his answer was that there were no exceptions to be made and the positions taken under the informal concession should be unwound. By that time, the damage had already been done.The Bank of England also set up that f ollowing the consolidation of Baring Securities Ltd and Baring Brothers and Co., it allowed the two to be categorized as one entity for capital adequacy and large exposure purposes, but the process of this consolidation was too informal and the results of it played a part in Leesons unauthorized activities. This not only meant that Leeson could hide his activities, but also the fact that he had access to a much larger pot of capital.Why was Barings Bank willing to transfer large cash sums to Barings Futures Singapore?Barings Bank believed that the large cash sums transferred to Barings Futures Singapore was for loans to customers as portrayed on the Barings Futures Singapore balance sheet. The key aspect of Japanese Future market was that exchange did not require a separation between customer and propriety funds. Therefore it was impossible to distinguish between the firms and the customers position.Why did the onset by the Bank of England to organize a pledgeout for Barings fail ?Throughout that weekend, the Bank of England hosted meetings in London to try to form a consortium to bail out Barings. The attempt by the Bank of England to organize a bailout for Barings failed because no one would assume the contingent risk of additional, but as yet undiscovered losses. Bank of London made a huge sweat to organize a bailout for Barings bank. The bailout failed because Barings bank reached the position where losses amounted more than take over the capitalization of the bank, estimated losses approached $1.1 billion. Further losses were inevitable and thus there was no one ready to assume the contingent risk of additional but yet undiscovered losses. The bank was trapped in such a situation that the amount of future losses was secret and unrevealed due to the unauthorized dealing by Nick Leeson. project regulatory and instruction reforms that might prevent a future licking of the type that bankrupted Barings.There have been numerous cases of collapses and ove rwhelming losses to companies in the corporate and banking sector and this called for some serious reformation, with particular attention to derivatives. The constitutional sector did not sit up and take notice until the Baring Brothers bankruptcy. How could an entity steeped with trust and history fall apart with no signs? Following the bankruptcy, reports were created by the Bank of England, SIMEX, and the Group of xxx to suggest ways in which regulators and legislators could increase monitoring of financial activities.After the collapse of Barings Bank, an article was published with the name of Global Institutions, National Supervision and Systemic Risk, and this article underlines the reforms and changes in the financial sector that have already been implemented.The reforms that have already been implemented include the expanded usage of netting and collateral enhancements in methods to measure risk greater off-balance-sheet risk disclosure extensive increases in major financi al institutions equity capital, financial sector consolidation and encouragement of growth of securitization.The Bank of Englands report detailed how the losses occurred, the reason the losses were unnoticed in and out of Barings, and the lessons learnt from the bankruptcy. The following are the five lessons the Bank of England identified (Ambit ERisk, 2010) counseling teams have a duty to insure fully the worry that they manageResponsibility for each business activity has to be clearly open up and communicatedClear segregation of duties is fundamental to any effective control dodgeRelevant internal controls, including independent risk management, have to be established for all business activitiesTop management and the Audit Committee have to ensure that significant weaknesses, identified to them by internal audit or otherwise, are resolved quickly.The list that Bank of England came up with seemed simple, but the truth was one (or usually several) points listed were often the re ason why corporations lost large amounts of money in the derivatives market.Other ways in which to prevent future debacles like the Barings collapse would be an increase in supervision of employees. Leeson never had a trading license prior to his arrival to Singapore and there was scarce monitoring of his activities since no one person was directly responsible for supervising his trading activities (Burnett, 2006). Also, a clear reporting line should be enforced because Leesons fraud could have been facilitated by confusion in having two reporting lines one to London for proprietary trading and the other to Tokyo for customer trading.Top management should also be aware of the business that they are dealing with. In the case of Barings Bank, Leeson was reporting huge gain to the company but top management should have known that arbitraging is a relatively low risk and low profit business (Collier Agyei-Ampomah, 2006), so how on earth could Leeson have been reporting such massive c lams? Top management could have identified these flaws immediately if they had known and had they done their job properly (Narayanaswamy, 2008). It is thus very important for top management to have sufficient knowledge of the field (or be involved in) to understand the complexities of business and its fundamental concepts.Based in Washington DC, the Group of Thirty began to be particularly apprehensive of the risks that derivatives posed. The Group has issued numerous periodicals to address these problems, mainly numbers like International Insolvencies in the Financial Sector, Discussion Draft, which outlined 14 ideas to reduce risk in the financial sector, particularly with derivatives. Another publication titled International Insolvencies in the Financial Sector, Summary of Comments from Respondent Countries on Discussion Draft, which showed member countries responses and opinions regarding the proposed changes to financial institutions. It was noted that the support for these c hanges were generally strong among all the countries that responded, which showed how Barings failure rocked the entire worlds confidences in the financial sector.

Role Of Armed Forces During Disaster Relief

lineament Of Armed compresss During misadventure respite1. Although the man has made extensive progress in his comparatively short existence on earth, he is still virtually lost(p) in front of vagaries of disposition. Natural adventures much(prenominal) as cycl mavins, flood and quakes emaciate mans domain at go away and cause much loss to bread and butter sentence and property. Despite every atomic number 53s concern for chances and technological festerings in the world, the reply to haps has been knee thumb and uncoordinated at inter state of matteral, national and earth directs. The problem is more neat in developing countries rather than in developed sensations. The United Nations and its specialize agencies allow always had an interest in and commitment to misadventure suspension. thitherfore, in that respect argon heterogeneous hazard reserve, activeness, prevention and mitigation programmes being carried expose by discordant United Nations Org anisations1.2. The trend of occurrence of accidents is increasing and go away escalate in future. adventures like tsunamis and seisms, which yield been the most destructive, along with the floods and droughts that stick up from extreme endure conditions, atomic number 18 expected to get worse callable to adverse impact of climate change. In the 21st century, the 2001 Bhuj earthquake the 2004 tsunami the 2005 earthquake in Kashmir heavy rainfall in Mumbai in 2006 when nearly 1 m rain fell in a single daytime the 2008 Bihar Kosi catastrophe the August 2010 cloud burst in Leh and, most recently, the folk 2011 Sikkim earthquake take a shit seen the arm forces as first acters2.3. In Indian context it is unlikely that the topical anaesthetic anesthetic polished administration will have the resources available immediately to deal with a major disaster such as the earthquake that occurred in Gujarat in 2001 or the Tsunami of 2004. Therefore, it is essential that the affirm establishments prep ar detail disaster vigilance proposes and keep the resources in terms of men and material ready for use at short notice. There is a need for civil administration at the district and tell apart levels to excogitate disaster easiness cells with a pool of reserve. At stupefy due to the inability of local administration to deal with innate calamities, build up forces atomic number 18 invariably employed for disaster sculptural support.4. In spite of disruption of communications and the absence seizure of a major military efficacy of troops and resources, the response of the build up forces has always been prompt and won the respect of all concerned. The spine and strength of the Armed forces vis--vis civil organisations has been the sense of discipline, training to serve to orders, adaptability, unselfish dedication to the cause, genuine concern and focused action. These factors have always resulted in mevery individuals and NGOs wanting to r disc overe assistance through the Armed forces. comprehend the good work being done by the Armed forces, the political relation organisations, NGOs and civil agencies then join in the relief effort. This sacrifices a genius of cooperation. The mere presence of Armed forces troops instils a sense of certificate and gives solace to the affected people3. happening resolution Activities5. tragedy vigilance, which involves judgement and response, piece of ass be seen in non-homogeneous activities. The following are respective(a) activities of emergency response.Warning.oceanrch and Rescue.Evacuation and Migration.Response and Relief.Logistics and Supply.Communication and Information forethought.Rehabilitation.Post- incident mind4.6. Natural calamities impart lessons at a huge greet of life and property. But if these lessons do not lead us to learning, then the cost will seem even heavier. At the time recurrence of disaster, the misfortune to learn from the previous incidents hu rts the most. The massive earthquake in Gujarat and the subsequent nut house were indicators of how important prior planning is in managing relief and rehabilitation during various disasters. The Kutchh region infallible massive immediate assistance , however civil administration was unprepared for such crisis. Indian armed forces were employed for the relief from the begining. This made the need for a proper disaster mitigation plan very apparent. Learning from experience is essential in building a knowledge resource which would help in being better prepared in the future. CHAPTER IIMETHODOLOGY1. Hypothesis. A common thread in a landed estates response to disaster situation is military foul to civilian regimen. India disaster relief mechanism in the establish form lacks the required synergy between civil and military organisations to facilitate a synergised response.2. educational activity of Problem. The civil administration often falls back on the armed forces for assistanc e in crisis situations. Efficient disaster commission mechanism, therefore, should incorporate the armed forces at distributively stage. The formulated plans should specify the assistance likely to be required in disaster situations. The most efficient system will be to have seamless integration in operations, with an aim of essence competency areas of each establishment giving its best in to the lowest degree time. The aim of the study is to examine the disaster relief mechanism brisk in the uncouth and analyze the interplay of various organizations in handling the disaster situation.Justification for the Study3. oer the past few years, the governing has introduced a paradigm shift in the progress to disasters. Corner stone of this approach is the realisation that disaster prudence has to be multi-disciplinary and spanning across all the sectors of development. As calamities evoke extraordinary response, the civil authoritys reliance on the Armed pull ups has as well eve r increased. Due to their quick response, Armed forces have become a mantra in the hands of the defer to respond to such calamities spanning from Law and send problems to large scale disasters. Despite our country being extremely penetrable and prone to natural calamities, no detailed hazard and vulnerability assessments have been carried out either at the call down or the interior(a) level5.4. Is the country adequately prepared with infrastructure and strategy against various natural disasters? There are differences of opinion on this issue. According to some, there are certain limitations, but overall, the country is well equipped. Others, however point out that the country does not have detailed vulnerability assessments, forcing it to only respond to calamities and organise reconstruction6. It is in this context that this study assumes greater importance. It will analyse various facets of disaster preparedness, evaluate existing structures for disasters management and gear up forward its recommendations.5. For the purpose of this study disasters related to war, civil disturbance and decompress disasters (Like crop failure, famine etc) will be kept out. Natural disasters (Like floods, earthquake etc) and the response of armed forces in fortune civil administration would be the focus of the study. The study is basically confined to the image of Armed forces, to imply Air overstretch and Navy in providing assistance to the civil political sympathies activity in all natural calamities.6. Method of Data Collection. Data and discipline has been collected from Military Papers, periodicals, newspapers and books. hap management setup of the country has been derived from NDMA 2005 Ministry of plateful Affairs documents on disaster management.7. Organisation of the Dissertation. The re assay paper is cover at a lower place the following Chapters -(a) Introduction.(b) Methodology.(c) matter insurance policy on disaster management.(d) mathematical bunk of armed forces.(e) International disaster relief system.(f) Current concerns and recommendations.CHAPTER III home(a) POLICY ON DISASTER MANAGEMENTAs of now, the government has no concrete disaster management policy. Many disasters are first created by us and then crores of rupees are spent on return and relief operations. The government should focus more on a sustainable clay sculpture of development which can suspend disasters.S to a lower place Lal Bhauguna1. Evolution of Disaster perplexity in India. Disaster management in India has evolved from an activity-based reactive setup to a proactive institutionalized structure from single faculty domain to a multi-stakeholder setup and from a relief-based approach to a multi-dimensional pro-active holistic approach for trim polish risk. The beginnings of an institutional structure for disaster management can be traced to the British period following the series of disasters such as famines of 1900, 1905, 1907 1943, and the B ihar-Nepal earthquake of 1937. Over the past century, the disaster management in India has undergone substantive changes in its composition, nature and policy7.2. Emergence of Institutional Arrangement in India. A abiding and institutionalised setup began in the go of 1990s with set up of a disaster management cell under the Ministry of Agriculture, following the closure of the decade of1990 as the International Decade of Natural Disaster reduction (IDNDR) by the UN General Assembly. Following series of disasters such as Latur quake (1993), Malpa Landslide (1994),Orissa Super Cyclone (1999)and Bhuj Earthquake (2001), a high powered mission under the Chairmanship of Mr. J.C. Pant, secretaire, Ministry of Agriculture was make up for bringing up a systematic, all-round(prenominal) and holistic approach towards disasters8. There was a shift in policy from an approach of relief through financial aid to a holistic one for predicting disaster management. Consequently, the disas ter management division was shifted under the Ministry of bag Affairs in 2002 and a hierarchical structure for disaster management evolved in India2.Organisation and Structure of Disaster Management3. Disaster management division is headed by Joint escritoire in ministry of home affairs, who is assisted by three Directors, Under Secretaries, Section Officers, Technical Officer, Senior economical Investigator consultants and different supporting staff. The upper echelon of the structure withal consists of secretarial assistant (Border Management), Home Secretary, Minister of dry land in charge and the Home Minister.4. slip from the relief and response mode, disaster management structure in India started to address the issues of early warning systems, prognostication and monitor setup for various weather related hazards. A structure for flow of breeding, in the form of warnings, alerts and updates about(predicate) the oncoming hazard, in accompaniment emerged in this fram ework. A high powered meeting was setup by involving representatives of different ministries and departments. just about of these ministries were also designated as nodal politics for specific disasters3.Disaster Management Act, 20055. This Act wills for the trenchant management of disasters in the country. NDMA provides institutional mechanisms for formulating and monitoring the death penalty of the disaster management. It also ensures measures by the various branches of the Government for prevention and mitigation of disasters and prompt response during any disaster situation. The Act provides for setting up of bailiwick Disaster Management consent under Chairmanship of the thrill Minister, State Disaster Management Authorities under the Chairmanship of the Chief Ministers, zone Disaster Management Authorities under the Chairmanship of Collectors/District Magistrates/ replacement Commissioners.6. The Act except provides for the fundamental law of different Executive c ommission at national and state levels. Under its aegis, the National Institute of Disaster Management (NIDM) for capacity building and National Disaster Response perpetrate (NDRF) for response purpose have been set up. It also mandates the concerned Ministries and Departments to draw up their own plans in accordance with the National image. The Act further contains the provisions for financial mechanisms such as creation of bills for response, National Disaster Mitigation stock certificate and similar funds at the state and district levels for the purpose of disaster management. The Act also provides specific roles to local bodies in disaster management4.National Level Institutions7. National Disaster Management Authority (NDMA). The National Disaster Management Authority (NDMA) was initially constituted on May 30, 2005 under the Chairmanship of Prime Minister. The NDMA has been mandated with laying down policies on disaster management and guidelines which would be followed by different ministries, departments of central government and state government in victorious measures for disaster risk reduction. It has also laid down guidelines to be followed by the state government authorities in swig up the State Plans and to take such measures for the management of disasters, Details of these responsibilities are given as under -(a) Lay down policies on disaster management.(b) Approve the National Plan.(c) Approve plans prepared by various ministries or departments of the government of India in accordance with the National Plan for disaster management.(d) Lay down guidelines for the State Authorities in drawing up the State Plan.(e) Lay down guidelines for the different ministries or departments of the government for the purpose of integrating the measures for prevention of disasters and the mitigation of their effects in their development plans projects.(f) Coordinate the implementation of the policy and plan for disaster management within the country.(g) Recommend provision of funds for the purpose of disaster mitigation.(h) Provide support to other countries affected by disasters on the recommendation of Central Government.(j) befool other measures for the prevention of disaster, mitigation, preparedness and capacity building for dealing with the disaster situation .(k) Lay down policies and guidelines for functioning of the National Institute for Disaster Management9.8. Composition of NDMA. Besides the nine members nominated by the Prime Minister, Chairperson of the Authority, the Organisational structure consists of a Secretary and tailfin dollar bill Joint Secretaries including one Financial Advisor. There are 10 posts of Joint Advisors and Directors, 14 accessory Advisors, Under Secretaries and Assistant Financial Advisor and Duty Officer along with supporting staff10.9. State Disaster Management Authority (SDMA). The Disaster Management Act, 2005 provides for constitution of SDMAs in all the states and UTs. The Act envisag es establishment of State Executive delegation, to be headed by Chief Secretary of the state Government with tetrad other Secretaries of such departments as the state Government may think fit. It has the responsibility for coordinating and monitoring the implementation of the National Policy, the National Plan and the State Plan.10. District Disaster Management Authority (DDMA). NDMA provides for constitution of DDMA for every district of a state. The District Magistrate/ District Collector/Deputy Commissioner heads the Authority as Chairperson as well an elected representative of the local authority as Co-Chairperson. The District Authority is responsible for planning, coordination and implementation of disaster management and to take such measures for disaster management as provided in the guidelines. The District Authority also has the power to examine the construction in any area in the district to enforce the safety standards and also to arrange for relief measures and respo nd to the disaster at the district level.11. National Institute of Disaster Management (NIDM). In the backdrop of the International decade of Natural Disaster Reduction (IDNDR), a National centre of disaster management has been established at the Indian Institute for Public organization in 1995. The Centre was subsequently upgraded and designated as the National Institute of Disaster management on 16th October 2003. Disaster management act, 2005 entrusts the institute with various responsibilities, such as to develop the training modules, press re expect and financial backing for disaster management, organise the training programmes, organise study courses, conferences, and seminars to promote disaster management. It is also responsible for publication of journals, research papers and books on disaster management11.12. National Disaster Response Force. The National Disaster Response Force has been constituted under Disaster management act, 2005 by up- pace/ alteration of octette standard battalions of central para military forces i.e. devil battalions each from Border Security Force, Indo-Tibetan Border Police, Central Industrial Security Force and Central Reserve Police Force to build them up as a specialist force to respond to disaster or disaster like situations.13. The eight battalions of NDRF consist of 144 specialised teams instruct in various types of natural, manmade and non-natural disasters.72 of such teams are designed to cater to the Chemical, Biological, Radiological and Nuclear(CBRN) calamities besides natural calamities. Each NDRF battalion consists of 1149 personnel organised in 18 teams comprising of 45 personnel, who are being equipped and trained for rendering effective response to any disaster situation, both natural and manmade. All these eight battalions are being trained in natural disasters while quartette of them are being supernumeraryly trained for handling CBRN disasters. Based on vulnerability profile of different regions of the country, these specialist battalions have been presently stationed at the following eight places-Bhatinda.Gr. Noida.Vadodara.Pune (talegaon).Bhubaneshwar (mundali).Kolkata.Guwahati.Patna.Chennai (Arakkonam).1214. The Government of India has approved the raising of two additional battalions of National Disaster Response Force by up gradation and conversion of one battalion each of Border Security Force and Central Reserve Police Force to be located in the states of Bihar (Bihata, Patna) and Andhra Pradesh (Vijaywada) respectively. The administrative approval for raising the two battalions was issued on 13-10- 201013.15. State Disaster Response Force. The states/UTs have also been advised to set up their medical specialist Response Force for responding to disasters on the lines of National Disaster Response Force by the Ministry of Home Affairs. The Central Government is providing assistance for training of trainers. The state governments have been also advised to utilise 10 per cent of their State Disaster Response storehouse and Capacity Building Grant for procuring the search and rescue equipment and for training purposes of the Response Force14.Civil defence reaction16. Role of Civil Defence. During times of emergencies, the CD organisation has the vital role of mobilising the citizens and helping civil administration for saving life and property, minimising damage, and raising public morale. 225 towns have been nominated as CD towns.17. Each town has nucleus of four Permanent Staff along with cd CD Volunteers for a two lakh nation. It is expected that each state will have one CD Training Institute with permanent strength of 36 personnel, five vehicles and other equipments. The District Magistrate is designated as a Controller for CD Towns. The present strength of CD volunteers is 5.72 lakhs, out of which 5.11 lakhs are already trained. The target strength of CD volunteers has been fixed at 13 lakhs based on the population of CD towns as per 2001 ce nsus15.National Crisis Management18. For effective implementation of necessary relief measures in the wake of a natural disaster, the console table has established a Committee. On the constitution of this committee of the cabinet, the concerned Secretary will provide all the necessary information and data to and set about directions of the cabinet committee in all the matters concerning disaster relief. In the absence of this cabinet Committee, all matters relating to disaster relief will be inform to the Cabinet Secretary.19. National Crisis Management Committee. A National Crisis Management Committee (NCMC) has been constituted in the Cabinet Secretariat. The composition of the Committee is as under16-(a) Cabinet Secretary Chairman.(b) Secretary to Prime Minister Member.(c) Secretary (MHA) Member.(d) Secretary (MOD) Member.(e) Director (IB) Member.(f) Secretary (RAW) Member.(g) Secretary (Agriculture) Co-opted Member.(h) An Officer of Cabinet Secretariat Convener.20. Ca lamities Relief Fund. The government has earmarked two funds i.e. Calamities Relief Fund and National Fund for Calamities. The nodal business office for recommending release of these two funds is the Crisis Management Group in the Ministry of Agriculture, which is headed by Central Relief Commissioner. The allocation for the all the states under these funds is done by the Finance Commission for a duration of five years, based on the vulnerability of the states to Natural calamities and average expenditure. National Fund for Calamities is additional fund besides Calamities Relief Fund while 75 percent of CRF is contributed by the centre, the allocation under National Fund for Calamities is but by the centre and more or less discretionary17. foretell Warning21. Forecasting about climate change is pre requisite for taking preparedness measure to respond to the disaster is the most important divisor of disaster management. The Ministry of Environment Forest , Ministry of Earth Sci ences , Ministry of Science Technology, Ministry of Agriculture, Ministry of Water Resources, Ministry of tender Resource Development, Ministry of Non-conventional Energy, Defence Research Development Organization, Ministry of Defence, Ministry of Health and Family Welfare, Indian piazza Research Organization and Indian Meteorological Department promote and undertake climate and climate change related research in the country18.(a) cash machine Watch Stations. A network of 10 Global Atmosphere Watch Stations consisting of Allahabad, Jodhpur, Kodaikanal, Minicoy, Mohanbari, Port Blair, Pune, Nagpur, Srinagar and Vishakhapatnam, is maintained by IMD as per WMO protocols and standards since 1974 to generate data and information on the exchange of trace materials between the aura and the earths surface, making atmospheric turbidity and air quality measurements to quantify trends and dit rain threats.(b) Atmospheric monitoring. There are 25 types of atmospheric monitoring networks t hat are operated and coordinated by the IMD. This includes meteorological, climatologically, environment, air pollution and other specialized observation of atmospheric trace constituents.(c) Cyclone Warning. The IMD has established an observation network for sight cyclones through 10 cyclone detection radars along the borders. The detection range of these radars is 400 km. INSAT-1B satellite also monitors cyclonic movements. Ships and commercial radars are also apply for cyclonic warnings. About 260 merchant ships have meteorological observation systems.(d) fill up Forecast. The Ministry of water resources has an effective flood forecast system with 157 flood forecasting centres covering 62 river basins. Along with IMD, they monitor rainfall water levels in the reservoirs. India has also developed radars which give accurate estimate of rainfall up to 200 km around the radar site.(e) Tsunami warning. Post tsunami dated twenty-sixth December, 2004, Ministry of Earth Sciences ha s established the Indian National Tsunami Warning System at Indian National Centre for Ocean Information Services (INCOIS), Hyderabad. The Tsunami earlier Warning System (TEWS) was made operational on 15th Oct 2007. This agency has developed a protocol for issue for Tsunami Watch, Alert and Warnings. The Centre gives information to all responders about the origin, time, location of the epicentre, magnitude and depth of an earthquake inwardly the ocean and accordingly issues bulletins.(f) go down Warning. DRDOs network of more than fifty laboratories is deeply engaged in developing Defence technologies. Centre for Snow and Avalanche Study Establishment (SASE) is one of the laboratories of the DRDO located at Chandigarh with its primary function to do research in the field of snow and descends and to provide avalanche control measures and forecasting support to Armed forces.Role of Voluntary Organisations22. The role of voluntary organisations is to help people overcome the proble ms created by natural calamities by providing relief services to the people. They also works as the eyes and ears by acting as the intermediary between the masses and the government agencies to avoid duplication, ensure proper distribution of resources and organise vigilance groups for preventing of misuse of resources.23. Some of the activities under taken by voluntary organisations are-(a) Establishing free regimen distribution centres, distributing blankets, clothes and medicines to prevent epidemics.(b) Organising necessary relief camps, first aid centres, and immunisation camps.(c) Organisation relief teams and sending them to far-flung affected areas to provide relief and monitor relief programmes.(d) Organising awareness programmes about different relief activities initiated by Government and Non Government Organisations.(e) Generating employment opportunities in the affected areas.(f) borrowing of families of the affected areas.CHAPTER IVROLE OF ARMED FORCES1. The armed fo rces of any nation are probably best organised to provide support for establishing a various of public services like public works, communications, transport, medical services, search rescue, and support activities. They are able to react quickly in a self contained, self sufficient and mobile fashion. Armed forces personnel are well trained in the skills necessary to perform their professional activities and can function under an integrated / flexible management system. So there is an enormous potential inherent in them to provide enormous capability to restore emergency services.2. During the natural calamities, when many parts of the country are affected by them and it is beyond the capability of local administration to organise the rescue and relief, armed forces may be called upon to provide / organise relief measures. Armed Forces may also be called upon to provide assistance to other friendly countries, in case this has been requested for. One such deterrent example is that of Bangladesh. In 1991, when it was hit by worst cyclone in the history of the country the US armed forces, carried out relief operations19. In addition Indian Air Force also sent six helicopters for airlifting relief material to the affected areas.3. Each year Armed Forces are called upon on several occasions for rendering assistance to civil administration passim the nation during monsoon season for providing rescue and relief during the floods. The role of the armed forces during relief, rescue operations after Uttarkashi earthquake, Latur earthquake in Maharashtra, Chamoli earthquake and Floods in Orissa are well known.4. Assistance Provided by Armed Forces. The Armed Forces may be called upon to render following type of assistance during natural calamities20-(a) Infrastructure for restrain and Control.(b) Medical Aid.(c) Transportation of Relief Material.(d) Establishment of Relief Camps.(e) Construction and resuscitate of Roads and Bridges.(f) Maintenance of Essential Servi ces.(g) Evacuation of People to Safer Areas.(h) Stage management of International Relief.5. Since the civil administration remains ill equipped for initiate quick response to major disasters, the armed forces has been the primary option. As one of the most dedicated, professional, and modern armed forces in the world, the Indian armed forces respond to any disastrous situation with all their might. It is due to their technical competence, trained manpower, and logistical capabilities that they are always ready to rapidly undertake any kind of disaster-related rescue and relief operations.6. They are also located in most remote areas where natural calamities are frequent. For instance, when the tsunami hit the Indian coast on December 26, 2004, the Indian armed forces, co-coordinated by the Integrated Defence Staff (IDS), efficiently handled relief, rescue, and evacuation work under Operation Sea Wave, including extending aid to Sri Lanka and Maldives under Operation Rainbow and Ope ration Castor, respectively.7. Whether, it was the Kashmir earthquake of 2005, the tropical cyclone in Bangladesh in, 2007, the fire at Burrabazar in Kolkata in 2008, the serial blasts at Bangalore and Ahmedabad in 2008, or the Mumbai attack of November 2008, the roles played by the armed forces are numerous. In August 2010, when Leh, was hit by flash floods which killed many people and left wing many other injured, the Indian Armed forcess resp

Policy Response to the Mobility Economy

policy Response to the Mobility EconomyThe molding of acid as we know it today is poised to make a shifting. This switching is projected to happen in the next seven to ten age. This transformation volition be a complete overhaul of our true consciousness of how mint and goods transported from one local anaesthetice to an another(prenominal). The existing model of imparting has bewilder outdated and is extremely inefficient. What we up-to-the-minutely term as conveying is evolving into what forget be known as mobility. The thought of mobility brings with it a whole tender concept of how people and goods ar going to moved more efficiently. Sustainability in allow be the major benefit of this shift in the way we gull this model of mobility. This new model playd by engager direct and public insurance is responsive to the utilizer. The way policymakers atomic number 18 responding to this new model of mobility is the stress of this paper. Policy Strategies that Create tax incentives to consumers that in effect suffice manufacturers get their products to market. at that place is cutting edge engineering science that is essential for the transformation. How policymakers be responding to the challenges that this technology leave behind bring is also another focus of this paper. some other element that testament be crucial for this mobility concept to develop leave alone be the infrastructure requisiteed for a totally attached placement of integrated, goodly transportation carcasss. How policy makers make the essential infrastructure upgrades lead be dependent on funding. What are the possible sources of this funding?Our menses transportation model denotations only the mode of movement. Examples are cars, trucks, commuter trains and b implements. The effective act of movement of transporting people or goods from one place to another. The menstruation transportation model is inefficiencient. Inefficiencies implicate longer commuting times collectable to traffic congestion and parking difficulties. Public transportation inadequacies. Use difficulties for non-motorized transportation excerptions. The inefficient use and loss of public space. Extremely high nutrition equals. Huge environmental impacts i.e. poor air quality and noise pollution, non-renewable thrust consumption. Accidents and safety, heavy land use consumption, problematic logistics for urban freight distribution. Briefly. If looked at from a purely economic standpoint, in 2013 traffic congestion cost Americans $124 billion in direct and indirect losses, this number leave renegade to $186 billion in 2030. (Robert Mendelsohn, 2007) Poor air quality initially regulate by the Clean Air mould is still causing material damage here in the United States. Specifically, ammonia and the five criteria pollutants finely and coarse particulates, sulfur dioxide, nitrogen dioxide, and volatile organic compounds. These contaminants come from th e use of fossil enkindles these contaminants cause damages that range from $75 $280 billion annually. (Robert Mendelsohn, 2007) so at that place is the issue of noise pollution. This contaminant directly affects the quality of spiritedness in a community.How will this new concept of mobility reduce or carry impinge on these negative externalities produced by the current transportation model? Lets take down by defining what is meant by mobility. Mobility will be a consumer or a user-centered concept. See Illustration 1. Mobility will be a reference to the connectivity and the accessibility of how we transport. A system of interconnected fomites such as crisscross galvanic vehicles (HEVs), plug-in galvanic vehicles (PHEVs), battery voltaic automobile vehicles (BEVs), fuel cell vehicles (FCEVs) or compressed natural gas vehicles (CNG). These vehicles will have technology that will bring new applications of information technology that will facilitate vehicle to vehicle and vehicle to net profit communications. The network of connectivity will result in a seamless transportation system. Another element of this new concept of mobility will be fuels. What fuel technology preferred over others. Vehicles connected through a yet to be built infrastructure. Infrastructure refers to the underlying facilities and systems serving a country, city or area, including the services and facilities necessary for its delivery to function. In this sense, it means the physical components of the interrelated systems that are providing the commodities and services that are essential to enabling, sustaining or enhancing the standard of societal living. An infrastructure upgrade, in turn, will create opportunities for consumers to choose between the modalities that will emerge as our system of mobility begins to form. Modalities such as car sharing, car-hailing, ride sharing, modern jitneys, vehicle indecorum and bike sharing. (MIT Energy Initiative, 2016) A connected sys tem of transport will eliminate waste. Eliminate congestion and the wasted hours of nonproductivity. When vehicles communicate with one another, there will be an increase in safety and a step-down in car crashes. Autonomous vehicles will eliminate the need for whacking amounts of land use devoted to parking and storage of vehicles. Vehicle to network and vehicle to vehicle communication can monitor traffic conditions objective time, and alternate routes can be suggested to the user if road capacity is reached. If a road hazard develops vehicle to network communication will natty the network so the appropriate personnel can be dispatched to polish the problem. Mobility recognizes that transportation products and services must be responsive to the needs, habits, and preferences of consumers. Consumers will shape how these elements of mobility are deployed. Just as important as consumer choice will be public policy. Figure 1 (MIT Energy Initiative, 2016)On the other side of the m odel with just as much influence on the elements of new modalities, technology, vehicles, fuels, and infrastructure is public policy. Federal, State and local governments have implemented a wide range of policies in recent decades to reduce transportation-related fuel consumption. Policies that set emissions standards to address air quality. Policies that attempt to manage traffic congestion. at one time we need policies that will address the challenges that mobility will create. All these policies, and more locate into three major categories price-based policy, regulatory policy, and policy promoting research and maturement.The price-based policy is a market-based instrument that uses the market and price to provide incentives to reduce or eliminate negative externalities. In this case, policies that will continue to incentivize the use of alternative vehicle propulsion units and renewable energies.Regulatory policy instruments also called command-and-control public policy can m andate the specialized performance to be achieved. As in the case of emission standards and CAF standards. Regulatory policy can also be use to command and control the technologies to be use.The policy promoting research and development. There are a number of tools that exist currently to do this. These tools include direct funding of government research facilities, grants to university researchers or private-sector researchers, government contracts for specific projects, and tax incentives. However, each of the categories will require decisions to be made approximately how to structure the specific program.The Federal government has enacted price-based policies and legislations that promote the U.S. market for electric pack vehicles. A new effort has been proposed to support advanced technology vehicle adoption through improvements to tax reference works in current law. The Federal government has made significant investments in research and development and competitive programs to encourage communities to invest in the infrastructure supporting these vehicles. Charging stations, busses, highway design, light rail, share ride ordinances giving preferential treatment to shared ride vehicles. Some of the Federal policies that encourage consumers to purchase electric drive vehicles include The Federal Purchase Incentive. Battery electric vehicles and Hybrid electric vehicles purchased in or after 2010 are eligible for a federal income tax credit of up to $7,500.00. The credit varies based the battery used to power the vehicle. Based on (kwh), this credit will begin to grade out to 50% of the full credit amount once the manufacturer has reached 200,000 plug-in electric vehicles (PHEVs), battery electric vehicles (BEVs) sold. The Fixing Americas Surface Transportation (FAST) Act incentive expired December 31, 2016, but will remain affix until the federal tax filing deadline. reauthorized the tax credit for EV charging tally equipment until 12/31/16. If the charging station is considered personal property, the tax credit is the small of 30% of the stations cost or $1k if the charging station is considered business property, the credit is worth the smaller of 30% of the stations cost or $30k.hither in Michigan, there are state policy initiatives that are promoting the use of alternative fuel vehicles that will accommodate the transition to mobility. The Vehicle command Exemption alternative fuel vehicles are exempt from emissions inspection requirements. The voltaic Vehicle Supply Equipment Rebate inch Michigan Power provides rebates of up to $2,500 to residential customers who purchase or lease a new plug-in electric vehicle and install Level 2 electric vehicle affix equipment with a separate meter. Customers must also sign up for the inch Michigan Power plug-in electric vehicle time-of-use rate. The rebate is available to the front 250 qualified customers who submit a completed application. Consumers Energy provides qualified customers with a reimbursement of up to $2,500 to cover the purchase, installation, and wiring for qualified Level 2 electric vehicle supply equipment. Plug-In Electric Vehicle Charging Rate Reduction Indiana Michigan Power, Consumers Energy, and DTE Energy offer a special time-of-use rate option to residential customers who own a qualified PEV.Interestingly, the history of battery power vehicles. In the late 19th and early 20th cytosine, electric vehicles (EVs) rivaled steam- and internal-combustion-powered cars for at once sales. In fact, in the very early 1900s, more EVs were sold in the US than any other vehicle. They were quiet, did not require drivers to toil with a hand-crank, clutch or gearstick, and limited driving ranges mattered little because they were typically used for short journeys in urban areas. With the advent of widespread oil exploration, the initiation of the electric starter motor and Henry Fords mass-production techniques, internal-combustion cars became c heaper to buy and run, more realistic too. As a result, electric mobility spent much of the 20th century consigned to history or the golf course. But during the last seven years electric cars have enjoyed a renaissance, as improved battery technology, the need to reduce vehicle emissions and government incentives combine. The Nissan Leaf, Tesla Model S and Renault Zoe have all appeared during this period. Mercedes and Volkswagen were among the manufacturers that announced all-new commitments to the segment at last Septembers Paris Motor Show.Policy makers will be guided by the need to craft policies that are consistent with larger public goals of clean air, reducing congestion, promoting sustainability, improving livability, promoting the use of renewable energy and noise reduction. With these goals as a guiding enduringness mobility can address each of these issues and virtually eliminate some.The path to maturation mobility will be local policy that is focused on livability and sustainability. This focus could result in an acceleration of vehicle electrification technology that will be further enforced by National and global emission standards. Budgets are always the chief concern of local and State governments. State and local governments are doing more with less. An idea may be to create a framework for private entrepreneurs to lead the way constructing the infrastructure that will be necessary for the connection of the mobility system. A network of connected vehicles. We can swing billions on new roads, bridges and light rail to move people and goods. Or, we can make a much smaller investment in the communications technology that allows more vehicles to operate intelligently on current streets and highways. Smart cities of the future will be those that embrace and integrate intelligent transportation systems. Driverless cars may be a long way off vehicle connectivity is not. (King, 2014)(SUMC), S.-U. M. (MARCH 2016). SHARED MOBILITY AND THE TRANSFORMA TION OF PUBLIC TRANSIT RESEARCH ANALYSIS. Chicago, IL Transit Cooperative research Program, Transportation Research Board, National Research Council, The National Academies.ABRAHAM, J. (FEBRUARY 4TH, 2016). CITY OF DETROIT FROM MOTOR CITY TO MOBILITY CITY. Detroit, MI.Adela Spulber, E. P. (August 2016). The Impact of New Mobility service on the Automotive Industry. Ann Arbor, Michigan Center For Automotive Research.Artificial Intelligence, Automation, and the Economy. (December 20, 2016). (p. 55). WASHINGTON, D.C executive OFFICE OF THE PRESIDENT.Barry, B. (2016, Q4). Leading The Charge. International Journal Of The FIA, Auto, pp. 46-51.Bloomberg New Energy Finance. (October 2016). AN combine PERSPECTIVE ON THE FUTURE OF MOBILITY. McKinsey Company.Board, T. R. (2015). Between Public and Private Mobility Examining the pilfer of Technology-Enabled Transportation Services. Washington D.C. Committee for Review of Innovative Urban Mobility Services.Daniel Morchain, S. F. (January 201 1). Strategising sustainable urban mobility in EU Neighbour Countries.Guerrini, F. (2014). Traffic Congestion be Americans $124 Billion A Year. Forbes.ITDP. (August 2015). Harnessing overlap Mobility for Compact, Sustainable Cities.Jeremiah Owyang, C. T. (2013). The Collaborative Economy. Altimeter Group.MIT Energy Initiative. (2016). Mobility of the time to come Examining future changes in the transportation sector. Boston Massachusetts Institute of Technology. irradiation Viechnicki, A. K. (2015). Smart mobility Reducing congestion and fostering faster, greener, and cheaper transportation options. Deloitte University Press.Robert Mendelsohn, N. Z. (2007). What do the regaining Caused by U.S. Air Pollution Cost? Washington, DC Resources for the Future.Scott Corwin, J. V. (2014). The future of mobility, How transportation technology and social trends are creating a new business ecosystem. Deloitte University Press.Sharon Feigon, C. M. (June 2016 ). Shared Mobility and the Transfo rmation of Public Transit. Washington D.C. National Academy of Sciences.VANHULL, L. (2016). Michigan races to wait in the drivers seat on autonomous vehicle legislation. Crains Detroit Business.

A Generic Supervisory Of ICT Agriculture Information Technology Essay

A Generic Supervisory Of ICT Agriculture Information applied science EssayAgriculture is the approximately assured engine of schooling and a authorized key to industrialisation (Ajibola, 2007). It is the basis of development, curiously in Africa and separate exploitation countries. Increased in pastoral production is the best manner of assessing that development. However, sufferance of sylvan technologies is the tool of measuring the levels of achievement and production potentials. Thus, reliable means of ameliorate the life conditions of the husbandmans. Priorities argon therefore attached to the slipway of exposing the farmers to current countrified practices (Mando, 2002).High population increase and excessive aspi ration on limited untaught and related technologies, mandated dissimilar stakeholders to devise the ways of utilising rude resources in effect. The stamp down means of achieving that and increase productivity be by dint of and by involving farm ers to several(a) decision making processes, and make them substantialise the ways of manipulating and compounding dissimilar techniques that come to both scientific and indigenous experience. The using up of best-loved breeding engine room that enhance level and vertical supervene upon of ideas among farmers and new(prenominal) related comp binglents becomes instrumental towards increased agricultural production and improve the living conditions of the arcadian pack.(Michiels, 2001) have defined ICT as a range of electronic technologies which when converged in new configurations ar flexible, adaptable, enabling and capable of transforming arrangings and redefining social relations. In related development, (Greenidge, 2003) defined ICT as those technologies that lav be map to link up tuition technology devices, much(prenominal) as personal instruction processing musical arrangements with communicating technologies, such as shout outs and their colloquys .The definitions above, stresses on the urgency for integrating modern communication technologies with conventional ones, aimed at devising to a greater extent than diversified means of exchanging and manduction of ideas among individuals. However, failed to consider the printed materials, group meetings and workshops, and question and answer overhaul as ICTs that argon utilize much, conveniently filled the gaps of impersonal communication and enhances the feedback mechanisms. accord to Joseph Schumpter, launching is simply the doing of new things or the doing of things that be already being make in a new way. A definition that is much(prenominal) than suppress is the application of technological, institutional and human resources and discoveries to productive processes, takingsing in new practices, products, markets, institutions and organisation that be improved and qualification enhancing. (Nigel, 2006).The two generic sources of presentation in agriculture be i n formal arrangement of experimentation and selection, and formal systems of investigate and development. These two systems be connected to national and international sector organisations. The female genitalia line is how to consider the two (2) start outes to innovations, i.e. interchange and multiple source personates. The central source model emphasise on the theoretical and rhetoric concepts of formal agricultural interrogation and reference book institutions, where major(ip) technical, institutional and social innovations evolved from the self-opinionated work of international search fondnesss. While the multiple sources of innovation model embrace natural and farmer selections, and considered agricultural inquiry and diffusion processes within unlike(a) political, economical, institutional and historical context through which technological changes occur. Thus, innovations evolved from various sources of farmers, international centres, indication staff, nati onal seek system and non-governmental organisations (Biggs, ).Information and communication technology is an example of private sector innovation of high priority. boorish filename appendage/education considered ICT issues as the nigh definitive topics for quite a long meter. (Poole, 2000) examined the conventional ICTs similar receiving set and television as the most measurable means of establishing a strong link between the farmers and their respective(prenominal) market demands, which be their major ara of interest. And the information gap among the farmers and early(a) beneficiaries ar bridged up through providing additional sources by the modern ICTs kindred satellite, computer, net inspection and repair profferrs and rally systems. Both ICTs be enforce for addressing developmental issues and reducing poverty, and argon adopted by target audience. coarse knowledge communion created by information flow helps in developing unlike agricultural sectors. Ho wever, there is a signifi cornerstonet difference in sharing of information between boorish field of views and agricultural knowledge centres. Accessibility of information by the targeted audiences atomic number 18 the responsibilities of any(prenominal) stakeholders and intermediary organisations(Stienen, 2007). In earlier and about related observations by (Kenny, 2000)the accessibility of ICTs by arcadian mess aid in devising a multi-dimensional approaches to technological uptake, poverty eradication and oppositewise(a) related developmental issues. While (Sk persona, 2001)argued that the use of ICT in addressing such issues, especially poverty eradication, depends to a gravider extent on the desirable information content and infrastructural facilities. It is distinguished to appreciate the earlier perceptions of (Chambers, 1997), that, individuals use of information and the reasons for employ that information supercedes the information context. He tho emphasised th at, in rustic areas, priorities are attached to policy and decision makers than the end users. Rural areas are therefore deprived by appropriate information, which is important for initiating developmental activities. in that respect is the need to bridge the gap in knowledge and solve some hassles through information acquisition.In considering the aims of ICTs in toleration of innovation, it is absolutely undeniable to examine the differences in the needs of the clownish and urban people, and the benefits derived. ICT uses could be more inclined to rural areas, mainly because of the contributions they provide towards agricultural developments. The roles therefore, provided by ICT in rural areas towards improving their livelihoods are unparallel to opposite areas.The roles of ICT in adoption of innovation in Nigeria is related to readying of agricultural support go, improving market efficiency and weather forecast, through the use of profits and gentleman(prenominal) Ser vice Mobile (GSM) phones, which improve farmers production potentials successfully, and reduces social isolation(Pickernell, 2004). Modern ICTs like internet, computer and wandering(a) phones that improves rural banking systems and accessibility to credit facilities were encouraged and canonic in Nigeria by the World Summit Information Society (WSIS), 2003 2005 as tools for developing rural communities (Stienen et al., 2007).The applications of ICT in Nigeria are considered vital for revolutionary role in diversification of scientific and indigenous technology. ICT abridged the gap created by geographical and cultural barriers, which are detrimental to agricultural production. Thus, information are shared effectively in post harvest technology, databases, market prices and other related information for present(prenominal) and future use, which is achieved by internet, email and world wide web to facilitate communication (Obayelu, 2010).The roles of ICT in adoption of innovation are suppose to first be considered from the integrated point of view, originally addressing the roles of individual ICTs. This is take upicularly important due to the differences in the socio-economic status of the rural people, and the need for further the participatory action community approach, which is user-driven in nature. It is important however, to appreciate the uses of combination of conventional and modern ICTs in adoption processes. To this effect, therefore, the benefits derived from the Telecentres in Nigeria and other developing countries towards exposing the rural people to more diversified ICTs need to be discussed.Kiplang at 2001, defined Telecentre as community-based centre that accommodate ICTs, including facsimile machine, telephone, computer based system with internet connection and photocopying. A few telecentres provide additional go such as postal facilities, selling of telephone cards, newspaper and refreshment. The main objectives of establishing tele centres in the rural areas is to eradicate poverty and talent building among the rural people.Telecentres are used for sharing knowledge among the rural people. It expose the farmers to various agricultural technologies and makes them to adopt the most desirable innovation. Telecentres are widely used in Africa and other developing countries. According to Synman, 2002, southbound Africa found fifty-six (56) telecentres in the year, 2002 out of the fuddleed one carbon (100) through Universal Service Agency. The average visiting clients were 140 per day, and the clients are from different areas of community-based services, like agricultural indication workers, farmers, t all(prenominal)ers and students and health workers.Telecentres are far-flung in Uganda, Senegal and Kenya, owned by Governmental and Non-governmental organisations. While some are managed by agricultural research institute, like Ugunja dialogue look for Centres in Kenya (Oguya, 2001).Oke-Ogun community develop ment network (OCDN), located in Oyo- offer -Nigeria and Fantsuan Foundation ICT in North-Central are two telecentres complete in the years, 2003 and 2000 respectively, by the people of those communities, provided single four (40) computers to Ago-Are town, mainly used for training rural people, without telephone services. With the intervention of Pam Mc run away from the United Kingdom, internet service provider was installed through internet connection in 2004. Information about agricultural innovations becomes readily forthcoming to the farmers in the area. Pam Mclean and Carole utilised the centres, with extensive web site on solar cooking information, which is rich information source, and introduced solar cooking picture count on which was widely adopted in the area. Participatory action research approach was the research method used. The technology is particularly relevant in minimising disforestation and other environmental problems caused by mining, and excessive farming activities on plant lands in Nigeria (Carole, 2005).As earlier emphasised, agricultural information in Nigeria and other developing countries are targeted to rural areas where the farmers lives, so that, their social and economic conditions are favourably improved. To achieve this, Emerald Publishing Group of the United Kingdom established a broad band service knowledge centre in Nigeria in Ihala village of Anambra State, which had a be aftered population of 20,000 people. The project took up in 2007 mainly for exchange of agricultural ideas among the farmers, aided by pop the question students. Computers with internet services and customised website were installed and monitored. Social interactions, mutual exchange of ideas and information retrieval were enhanced in the village. The project was successful, with up to 61% of the participants utilising the knowledge centre website for socialisation and discussions with farmers. Participatory community approach was effectively us ed(Ha, 2008).The serious problem facing all the telecentres in Nigeria is poor electricity supply and lack of stability in internet services. This problem is particularly not only in the rural areas, but in the urban counterparts. The unreliable internet connection reduces the efficiency of such telecentres, especially when users are eagerly anticipating imperative response to the ways of combating a disease/pest infestation and immediate call for directions of use for newly introduced package.Farmers in Nigeria have different backgrounds, spill the beans various languages. Standardised ICT usage cannot be applicable to all of them. The renewal in the language of communication, coupled with low understanding of English, inhibits effective economic consumption of ICTs. It is therefore, recommended that, cheeselikeware translators should be developed for proper ICT use.Linkages of such centre with universities and research institutions are not exceedingly intensified. Only one of the on tap(predicate) telecentre in Nigeria (OCDN) is linked through ICT with International Institute of Tropical Agriculture (IITA) and the university of Ibadan for received project implementations.Combining socialisation and research activities in the same spot, makes the people to inclined more to social related activities than research. communicate is still the frequently used ICTs for adoption of innovation in Nigeria. This can be attributed to its approachability than any other conventional or modern ICTs. Various adoption of innovation were successful in Nigeria through the use of radio set receiver. Combination of radio, posters, video and global system mobile (GSM) were used, with core annex programs for extending Purdue Improved cowpea plant Storage (PICS) technology in Nigeria and other West African countries. The project realised that, accessibility of the rural people in Nigeria to television was real(prenominal) low, mainly due to inadequate supply of elect ricity. Radio messages were used during various events of sensitisation, demonstration, follow-up and open the bag. at that place was a great difference in the adoption rates between villages with and without PICS radio messages. Thus, radio messages had significantly influenced the adoption of PICS sacks in Kano and other Northern states of Nigeria (Moussa, 2009). Posters were also distributed to various stakeholders that are entangled in the adoption of PICS technology, which revealed the various stages that can be used for best utilisation of PICS technology . A video sketch on the use of the technology in the languages that are easily comprehended by rural people in Nigeria, Niger and Burkina Faso (Hausa and French ) were transferred to the GSM phones through Bluetooth to augment the demonstrations performed in various villages. The use of GSM phones was due to the realisation of the project of the expanded use of those phones in rural areas of Nigeria and other African count ries (Moussa, 2009). Integrated ICTs (Radio, posters, video and mobile phones) were used in this project and tremendously increased the rate of adoption of this technology (PICS), thereby increase in the income level of the adopters, when sold the cowpea during lean period, and more importantly improved the health conditions of the people.Radio is the most persistently used conventional/traditional communication medium that is capable of transmitting various information to different set of people(FAO., 2004). According to (Chapman, 2003), radio has the capabilities of compass farmers, regardless of their educational status and provide relevant information in the language they can understand. They emphasised that, radio is the cheapest means of providing information with especial(a) power of linking the modern and conventional technologies for improving the livelihoods of the rural people. (Okwu, 2007) argued that, radio is the most widely appropriate medium used by all research an d annexe systems to extend messages to rural people, with teeny-weeny intellectualism to arrive at the remote places that could not be reach by the university extension workers.The sensitive assessment of great impact of radio in Nigeria is related to the findings of Iro, 2006 that, radio is the most preferred means of educating pastoral Fulani, which they found portable, even when herding. The Federal Government of Nigeria (FGN) utilises radio and television to introduce educational and enlighten programmes to Fulani. Educational status of Fulani is still low, despite the programmes aired for educating them, the enrolment pattern of their children in Nomadic schools is very low when compared with children of farmers in the same schools.The possible explanation to this is the nature of their movements from one place to another, which could affect the reception of the radio in some areas. It can also be attributed to lack of clear information about the time when the programmes ar e to be broadcasted and the content of the language. With all little things taken share of, and increasing level of awareness, educational and enlighten programmes would reduce the Fulani/farmer encounter that is persistently affect agricultural production in Nigeria.However, with all the benefits of radio as conventional ICT in Nigeria, the current status of telecommunication system after the sector has been reformed, is the emergence of many private radio stations. Those radio stations are profit-oriented, attached exorbitant charges to programmes sponsored by Non-governmental organisations, with little or no consideration to agricultural related programmes. While the public radio stations are producer-driven, inclined more to programmes that are satisfying the interest of the government.Television and Video Are important communication tools, ideals for demonstration of various techniques for easily understanding. They have an additional value of displaying motion pictures, esse ntial for program line and learning processes. Many farmers are reached and stimulated about the new ideas(Ifran, 2006). When fitly used, it is a source of reliable information, but most people considered it more as entertainment tools (Kari, 2007).According to (Omotayo, 2005), video has the potentials of using undistorted messages to reach large number of farmers, since it doesnt depend on any reception/ insurance coverage patterns.Video could be use to inspire individuals to involve in various proviso and implementation stages of agricultural activities. It allows farmers and extension agents to edit and document important events like agricultural shows.Telephone There was remarkable increased in telephone lines in Nigeria when GSM was introduced in 2001. GSM lines were then 450,000, raised to over 38 million lines in 2007. The teledensity increased accordingly from 0.4 to 24 g/cm3 (Adeyinka, 2009). Telephones are available in either fixed or mobile form. Telephones are the rapi dly spread ICT that cover large area in exchange of messages across various agricultural components of farmers, research and extension. According to (Shaibu, 2008) telephones are used by famers to access the agricultural markets conveniently. This helps in having knowledge about real situations in various markets, so as to enhance market efficiency and consistency. It can be integrated with computer for internet connectivity.Telephones are used by farmers to seek for immediate attention of extension agents during disease eruption or other consultations which are prevented by geographical barriers. Nomadic Fulani are relating efficiently with veterinary assistants through mobile phones as long as there are network coverage.Computers For agricultural information to be ample through web technology, established connection is needed between computers and internet service providers. Such connection is useful for generation, compilation, dissemination and exchange of agricultural inform ation (Zaman, 2002). Internet is therefore used by farmers to realise appropriate agricultural information that can be useful to adopt and utilise various innovations.(Munyau, 2000) explained that, world wide web (www) is used as important tool for creating awareness and providing agricultural information to farmers, period email services complements the www function , through establishing interactive linkages and effective feedback mechanism.High address of computer hard and soft wares and lack of computer literacy prevent rural people from using computer and other internet services effectively in evaluating relevant information about current technological advancements.THE ways ICT HELP RESEARCH AND EXTENSION IN OVERCOMING THE CONSTRAINTS OF ADOPTION OF INNOVATION IN NIGERIAThe Federal Government of Nigeria (FGN) has divided its agricultural research institutes into five (5) agro-ecological districts, and these zones are liable for effective linkages between research and extens ion components. There are various senders and receivers of agricultural innovations and ideas that are involved in the communication of agricultural technologies to rural communities. Such communication sources are considered obnoxious when sent to the farmers at a later stage of agricultural production (Obayelu, 2010).There are ogdoadeen (18) agricultural research centres in Nigeria that are solely trusty for improving the local crop varieties and developing new ones that are contributing(prenominal) to the alert farming situations, like rice, sugarcane, cassava, banana, soyabean to mentioned but a few.(Faturoti, 2006). investigate and extension components have distinctive functions in agricultural development. The research component is creditworthy for providing science-based innovations, which is significant for creating the much needed change to agricultural productivity. While the extension components conveyed the innovations to the farmers for adoption, and in turn communi cate the results, expectations and problems of the farmers to research component. For the roles of these components to be effective, there should be well coordinated linkage between them, which will enable each component to realise its potentials. In an effort to develop and strengthen these linkages, the FGN established various systems, like On-Farm Adaptive Research (OFAR), Farming System Research (FSR), Small Plot Adoption Techniques (SPAT) and Research- Extension Farmer- Input Linkage system (REFILS). Although, the systems are relevant in providing much needed interaction, the FGN failed to support the linkages financially. There is the need to provide effective means with less follow and highly satisfactory result. This could only be achieved through integrating ICT for reinforcing the linkages (Lawal-Adebowale, 2008).The roles of ICT in augmenting the services of agricultural research are considered significant in adoption of innovation. This can be achieved through ways in which the results of some findings generated by research institutions can be extended to farmers, which is associated with changing agricultural information systems, such that the information about new agricultural innovations can be assessed by farmers through the web-based information systems. This helps in providing access to relevant publications directly. Efficiency of agricultural research could be enhanced by making soft wares that are related to agriculture more readily available. Accessibility of research soft ware is highly intensified in International rustic Research Centres. It is particularly important to involve various stakeholders, so that high interactive sessions for improving information generation and utilisation among farmers can be achieved successfully.Agricultural development and improving the quality of peoples life in Nigeria and other developing countries depends to a greater extent on the viability of the nations agricultural research and extension syst ems (NARES). Investment in NAREs, by the FGN becomes necessary for achieving the much needed improvement in agricultural development. World Bank provides sufficient loans to Nigerias agriculture, specifically to Agricultural emergence Programme (ADP) and research institutions for effective performance.Nigerian Agricultural extension system passed through various stages of development from commodity focal point to intellectmaster services which have vision for farmers production potentials. computer system are available in all States, still the most dignified extension service delivery in Nigeria, involving Local Government staff for carrying out various tasks. REFILS provides the desirable linkages for various stakeholders to interact in generating appropriate technology, assigning responsibilities to the actors involved and strategise the effectiveness of the modified training and visit extension system.Farmers and private sector involvement is still low in technological devel opment and planning of the programme, with strengthen linkage mechanism. NARES and private sector (commercial and NGOs) provides specialised roles in the linkages, while the former is responsible for technological development, the later is engaged in the provision of essential inputs and supply services of credit and marketing. The major partners in REFILS are the National Agricultural Extension and Research Liaison Services (NAERLS) of Ahmadu Bello University, Zaria and the project coordinating unit (PCU). Non-Governmental organisations i.e. profit and non-profit oriented, joined extension services in Nigeria. The non profit oriented are providing extension services in a participatory inclined approach and weak linkages to NARS and public extension services.(NAERLS., 2002) find out that, in Nigeria, extension agents are the most effective means through which farmers have information about innovation. Until the intervention of State-wide ADP in 1980, the ratio of extension agent t o farmer was 1 2000, sometimes 1 3000. They further realised that, the ratio ranges from 1 848 in South Western zone to 1 1,650 in North Western zone, with more wider range when it involves women extension agents. The ratio failed to meet the recommendation of FAO of 1500.This therefore calls of integrating ICTs for cost effective and wider coverage of extension services that can complement the existing usage of ICTs in research and extension to overcome the problems of adoption of innovation. The cellular inclusion of modern ICTs to complement the existing conventional ICTs becomes imperative for making the farmers more knowledgeable about the current agricultural practices for increased in productivity.According to (Arokoyo, 2002), the roles of ICT in research and extension is traced after the establishment of ADP as World Bank assisted project. The strategy utilised the T V extension services in developing effective communication system. It was achieved through the use of mobile cinema vans, moving from one rural area to another, with extension publications that are printed in the languages easily understood by the people. productive implementation of which led to additional ICTs like radio, video and television in the mobile vans, when the bank increased the economic aid. ADPs in various states extends its extension messages through radio and television programmes. National Agricultural Technology retain Project (NATSP) was established by ADP, as one of its second developmental phase in 1996, with Development Support Commission (DSC) units, which increased the covering facilities. Through NATSP, more radio listening clubs were formed.(NAERLS., 2002) examined that, in the year, 2002, 70% of the states ADPs utilised one or more radio programs to broadcast agricultural information to farmers in their local languages that enhance proper understanding. The findings further revealed that, more than 48% of the ADPs broadcasts are relevant agricultural progra mmes in the television.The CTA-supported Questions and Answers service in Nigeria used by NAERLS and nine (9) collaborative institution popularly known as Nigerian Question and Answer Service (NAQAS) has revolutionalised the ICT in research and extension. Users of NAQAS are provided with information required through references, factional information referral and consultive services.In a similar development, United States Agency for International Development (USAID) in partnership with International Institute of Tropical Agriculture (IITA), Communication for Change (CFC), NAERLS and the Federal Ministry of Agriculture, established the Information and Communication Support (ICS) for agricultural growth in Nigeria, with aim of strengthen capacity of farmer assistance organisations to package and disseminate information to farmers, thus, enhancing information flow(Ogunyinka, 2002). The project was started in eight ADPs states.(Ogunyinka, 2002) emphasised that, the networking in the pro ject involves all the stakeholders and farmer association. The major activity of ICS is establishment of farmer resource centre in each of the eight states. The centres are supposed to have and utilised the following ICTsRadio and Television, Camera and Video, Computer with internet facilities, Telephone and Fax, Scanner, Photocopier and Printer, Cassette recorder/player, Generator and Lamination and spiral binding machine.The NAQAS and ICS are established to use ICTs in improve horizontal exchange of ideas among the farmers, thus improving extension services. The information flow focus on the end-users (user-driven), in order to satisfy their needs.Establishing integrated ICTs like NAQAS, ICS and other telecentres are exceptionally significant towards providing a relevant and reliable information to the farmers living in rural areas. It is important to note that, any sustainable information development that entails using modern and conventional ICTs that is not encouraging a stron g linkage between research/extension and the farmers should not have a significant impact in agricultural development. In Nigeria, the linkages between extension and farmers is highly intensified, while that, between research and farmers is comparatively weak. This can be attributed to the low level of literacy for assessing information easily, on part of the farmers and weak contacts to the farmers, depending on extension component to disseminate information and more emphasis on the managerial activities. The constraints the NAQAS and ICS may likely face is the mastery of accessibility of such centres by researchers and other literate individuals in the communities. The centres are supposed to provide intensive trainings to farmers for proper utilisation of the resources. The sustainability of this and other related projects that are funded by international organisations, tend to terminates if such funding terminates. The Local, State and Federal Governments are expected to consist ently monitor and evaluate the activities of such centres for achieving the desired objectives.The status of ICT in agricultural research and extension organisations in South Western Nigeria was assessed by Lawal-A., 2008, analysed that, all the eight agricultural research institutes and six extension organisations except, Osun State ADP, had computers, internet facilities and telephone system. Telex/fax machines were available in four research institutes, and two extension organisations. The result however, shows that, the ICTs were only found in some offices at the headquarters. The research and extension personnel with whom the field works are assigned have little access to such facilities. Adequate ICT infrastructure is necessary for agricultural development and the effect of such development could not be felt with the peripheral improvement in ICTs infrastructural facilities (Institute., 2005).Kano State ADP is shortly using mobile telephones to call for meetings, workshops an d other important information to farmer groups. More than 12,000 farmer groups were formed, each group comprises of 25 members. Focus group discussion and use of existing traditional groups were the techniques used in forming the groups. Each group has a leader possessing a functional mobile phone through which the head of extension unit of the ADP contact them for important messages that deserve immediate attention. Thus, the use of mobile phones facilitates communication and established reliable linkages between the extension and rural farmers.From the discussions, it was observed that, research and extension in Nigeria are currently using integrated ICTs in motivating farmers to adopt various innovations. However, the use of effective individual ICTs are relevant for extending messages to fa

Theories of Foreign Direct Investment (FDI)

Theories of Foreign Direct enthronization (FDI)This assignment tries to discuss variant theories concerning contradictory remove thr unrivaledment and give the statement as to whether the theories pass on a successful explanation of the principal(prenominal) determinants of much(prenominal)(prenominal) activityIn real sense the main theories of FDI does non provide successful explanation of the main determinants for such activity, as exempted by Dunning and Lundan (200881) trans topic Enterprises and Global Economy second Edition.Definition of unusual turn to coronation concord to graham flour and Spaulding (website entropy) carry outside(prenominal) investing in its classical definition is defined as the society from one verdant qualification physical investing into make a factory to an some other(a) soil. Foreign need investment (FDI) toys an special and growing aim in global business. It can provides a slopped with natural marts and mart authorityin g channels, cheaper merchandise facilities, access to k new-fangled applied science, harvest- condemnations, skills and financing. For a host farming or the impertinent coc refered which receives the investment, it can provide a inviolable impetus to economic development. The curb investment in building, machinery and equipment is in tell apart with making a portfolio investment, which is considered an in take investment. In recent years, given speedy growth and change in global investment models, the definition has been broadened to totally(a)ow the eruditeness of conk outing counsel please in a companionship or incloseprise outside the investing truehearteds basis awkward. As such, it may take many crops, such as a rank acquisition of a hostile faithful, construction of a facility, or investment in a joint venture or strategy alliance with a local anaesthetic anesthetic sign with attendant input of engine room, growing, licensing ofEwe-Ghee Lim (web in formation) The paper tells about both(prenominal) aspects of direct foreign investment (FDI) its correlation with economic growth and its determinants. The archetypal part foc put ons on positive spill all all overs from FDI slice the second deals with the determinants of FDI. The paper finds that go substantial defend outlives for positive spillovers from FDI, at that place is no consensus on causality. On determinants, the paper finds that foodstuffplace size, infrastructure quality, political/economic stability, and free dish out zones be important for FDI, slice results atomic number 18 mixed regarding the importance of financial inducements, the business/investment climate, labour cost, and openness.Dunning (19933), exempt that in that localization principle is little diversity aboutFDI THEORIES globalisation as a process of towards the widening of the intent and form of cross-border proceeding and the deepening of the economic interdependence mingled with the actions of globalising entities set(p) in other countries.The FDI theories explain the reason wherefore FDI occurs and the determinants of FDI. The theories view as traditionally emphasises food marketplace im perfection(Hymer, 1960 Kindlebeger, 1969) and steady specific advantages or ownership advantages derived from the ownership of intangible assets such as technologies, management skills, and organisational capabilities (Caves, 1971). Hymers market imperfections theories suggested that a squ be may have accredited advantage that may be generated from the field of technology, management or marketingA. L Calvet (198143-59) Journal of outside(a)ist communication channel Study (hhtp//teaching.ust.hk/ vexed on 07.11.2009. He assert that Kindleberger provided the first comprehensive muckle of the various theories of foreign direct investment along with the line of businesss convey by Hymer. He approach pathinged the question of direct investment from the sta nd advert of the perfectly competitive toughie of neoclassical economics by asserting that in a world of pure competition direct investment could not exist. Kindleberger (1969, p13) Indeed, when all markets operate efficiently, when there ar no external economies of do work or marketing, when information is costless and there ar no barriers to cover or competition, International manage is the only possible form of international involvement. Logically, it fol down(p)s that is the departures from the model of perfect competition that must provide the rationale for foreign direct investment. The first deviation had been noted by Hymer (1960/1976), who postulated that local bulletproofs have best(p) information about the economic environment in their solid ground than do foreign companies. According to his argument, twain conditions have to be fulfilled to explain the existence of direct investment (1) foreign star signs must possess a countervailing advantage over the loc al firms to make such investment viable, and (2) the market for the sale of this advantage must be imperfect. It was, thus, a natural timbering for Kindleberger later to suggest that market imperfections were the reason for the existence of foreign direct investment. Specifically, he came up with the following taxonomy Imperfections in goods markets, imperfections in factors market, outdo economies and administration imposed disruptions. This classification may be called the market figure of speech To cross new developments in the field of determinants of foreign investment, a somewhat antithetic taxonomy from that of Kindleberger was proposed to distinguish among four classes (1) market disequilibrium hypotheses, (2) establishment-impose distortions, (3) market structure imperfections, and (4) market a deal-ran imperfections. The common feature found in all the hypotheses in throng (1) entrust be the transitory temperament of foreign direct investment. FDI is an equili brating crash among segmented markets which eventually comes to an end when equilibrium is re-established that is when range of return be equalized among countries. The unifying characteristic in group (2) will be the role played by all host or family presidencys in providing the inducing to invest abroad. Group (3) will entangle theories in which the behavior of firms deviates from that assumed under perfect competition, through and through their ability to influence market hurts. Finally, in group (4) will be classified theories which depart from the technological assumptions behind the model of perfect markets that is, the assumptions about increaseion techniques and commodity properties. This last category will deal elementaryally with those phenomena which lead to market mischance or, cases where the decentralizing efficiency of that regime of signals, rules and build in sanctions which defines a outlay market system will fail. (Bator 1958, p. 352)Market disequil ibrium hypotheses The conception of a perfect economy and perfect competition requires the assumption that costs e verywhere argon adjust to bring supply and inquire into equilibrium. It may well be that because of partition in world markets rates of return ar not equalized internationally. In a disequilibrium context flows of FDI would take place until markets return to stability. Instances of disequilibrium conditions that provide incentives to invest abroad are those which apply to factor markets and foreign put blanket markets.Ragazzi (1973491) give tongue to that Currency overvaluation is perhaps the intimately salient example of these disequilibrium hypotheses. A currency may be defined as over graded when at the familiar rate of rally intersection costs for tradable goods in the country are, on the average, proud(prenominal) than in other countries. Such an occurrence creates opportunities for profit-making by retentiveness assets in undervalued currencies wi th the expectation that, once the equilibrium in the foreign exchange market is re-established, nifty gains will be realized. In mean snip, there is an incentive to finalize production of internationally flipd commodities in countries with undervalued currencies and to purchase income producing assets with overvalued property. The important point is that, once exchange rates return to equilibrium, the flow of FDI should stop. Even much foreign investors should sell their foreign assets, pocket the detonator gains, and return to interior(prenominal) operations.Foreign direct investment may be attracted toward areas where the average rates of profit are higher. This is basically the expectant markets disequilibrium hypotheses. It implies that, for a given aim of risk, rates of return on assets are not equalized internationally by portfolio capital flows, due to inefficiencies in securities markets-such as, thinness or luck of disclosure.According to Piggott and Cook (1999260- 261) International Business Economics A European positioning second EditionIt is difficult to fit into one neat surmisal because of the problem of definition secondly any system of FDI is almost needs a guess of MNCs. as well, and thus inseparable from the system of the firm. Thirdly, the nature of FDI makes it a multidimensional subject deep down the sphere of economics as well as an interdisciplinary one. It involves the guess of the firm, distri saveion surmisal, capital scheme, trade system and international finance as well as the afflict of sociology and politics. It is therefore not possible to strike any single theory of FDI due to many explanations of FDI. Also not easy to classify these explanations into diaphanous and neat groups, due to substantial overlapping surrounded by some of the explanations.They assort the theories into one-third categories.1). tralatitious theories2).Modern theories and3).Radical theoriesTraditional theories are based on neo-cla ssical economic and explain FDI in price of location-specific advantages.Morden theories emphasise the fact that product and factor markets are imperfect both domestically and internationally and that considerable transactional costs are convolute in market solutions. Also they ac experience that managerial and organisational functions play an important role in undertaking FDI.The radical theories, these take a to a greater extent than critical view of Multinational National Corporation (MNCs). permit 1st examine the ownership, Location and Internalisation advantages, some measures referred as paradigm of OLI.To explain the activity of MNCs there is common chord different types of advantages which is important.1).Ownership-specific advantages (OSA)These refer to original types of knowledge and privileges which a firm possesses and are not available to its competitor.These uprise due to the imperfections in commodity and factor market.Imperfections in commodity markets embroil product differentiation, collusion, and special marketing skills, and in factor markets come in in the form of special managerial skills, differences in access to capital market, and technology sheltered by patents. Imperfect market may too break from the existence of internal or external economies of scale or from government policies regarding taxes, interest rates and exchange rates.The market imperfection gives rise to certain ownership-specific advantages, grouped under the following headingsTechnical advantages-include holding production secrets such as patents, or unavailable technology or management-organisational techniques.Industrial organisation-relates to the advantages arising from operating(a) in an oligopolistic market such as those associated with joint RD and economies of scale.Financial and monetary advantages-includes preferential access to capital markets so as to obtain cheaper capital. inlet to raw corporals-if a firm gains privileged access to raw materia ls or minerals accordingly this becomes an ownership-specific advantage2).Location-specific advantages (LSA)-This refer to certain advantages which the firm has because it locates its production activities in a particular areaa) .Access to raw materials or minerals this normally represents an LSA. This advantage, however, applies to all the firms established in the locality and is not sufficient to explain FDI in itself pg 261b). Imperfections in international labour markets-these create real wage-cost differentials which provide an incentive for the MNC to shift production to locations where labour costs are low. Example electronics divisor firms using South easternmost Asian locations for assembly production.c). Trade barriers-These provide an incentive for MNCs to set up production in Europe to turn away CET. Similarly, high Canadian tariff barriers have been used in the onetime(prenominal) to attract US direct investment.c). Government policies-such as taxation and interest rate policies can influence the location of FDI.Internalisation-specific advantages (ISA) occur when international market imperfections make market solution alike costly. This representation the market is too costly or inefficient to undertake certain types of minutes, so whenever transactions can be organised and carried out more cheaply at bottom the firm than thorough the market they will be internalised and undertaken by the firm itself.The benefits of internalisation are as follows-a). the advantages of vertical integration cover such things as exploitation of market power through price discrimination and avoidance of government intervention by devices such as permute pricing.b). the importance of intermediate products for research-intensive activity the firm appropriates the returns on its investment in the production of new technology by internalising technology.c). the internalisation is not only when costless. It creates communication, co-ordination and control prob lems. There is also the cost of acquiring local knowledge.FDI theories1). Traditional theoryCapital arbitrage theoryThe theory states that. Direct investment flows from countries where profitability is low to countries where profitability is high. It means therefore that capital is quick both nationally and internationally. But sometimes implication is that countries with abundant capital should exportation and countries with less capital should import. If there was a link between the long-term interest rate and return on capital, portfolio investment and FDI should be moving in the same direction.International trade theory-the country will specialise in production of, and export those commodities which make intensive use of the countrys relatively abundant factor.2). Modern theoryProduct- rung theory New products appear first in the most move on economy in resolve to demand conditions.The maturing product typify is described by standardisation of the product, increase economie s of scale, high demand and low priceThe standardised product stage is reached when the commodity is sold entirely on price basis.The internalisation theories of FDIThe theory explain that why the cross-border transactions of intermediate products are organised by hierarchies earlier than determined by market forces.The theory of appropriability. The theory explains why there is a strong presence of high-technology industries among MNCs3).The electric theory of FDIThe theory tries to offer a general framework for determine the extent and pattern of both foreign-owned production undertaken by a countrys own enterprises, and that of domestic production owned or controlled by foreign firm. Dunning and Lundan(2008)Robock and Simmonds (198948) International Business and Multinational Enterprises 4th EdAssert that, the electric theory of international production enlarges the theoretical framework by including both home-country and host-country characteristics as international explanatory factors. It argues that the extent, form, and patterns of international production are determined by the configuration of three sets of advantages as perceived by the enterprises. First Ownership (O) advantage 2nd Location (L) and 3rd Internalization (I) advantage in order for the firm to transfer its ownership advantages cross shipway national boundaryDiamond ostiarius possiblenessDaniels, Radebaugh and Sullivan (2009287) 12th Edition. International Business Environment and Operations Pearson International EditionThis is the theory which shows four conditions which is important for competitive superiority demand conditions factor conditions related and supporting conditions and the firm strategy, structure and rivalry.Demand conditions whereby the company start up production at near the observed market for example an Italian ceramic tile pains after solid ground War II At that time there were post-war housing cop and consumers wanted cool floors because the climate was hot. Another factor is factor conditions which withdraw natural advantage inside absolute advantage theory and the factor-proportions theoryConclusionTheories of Foreign Direct Investment (FDI)Theories of Foreign Direct Investment (FDI)This draw has discussed different theoretical framework of FDI that takes place. These theories briefly explain why firms go to trouble when establishing or acquiring abroad. Theories that use on this plow are Hymers contributions, product life- one shot theory, caves theory, internalisation theory, the eclectic paradigm, strategic motivations of foreign direct investment and investment path development (integrated data processing) theory. This report also assesss Honda self-propelled as an example on how they survive and compete in the competitive international markets nowadays with using FDI models, statistics and theories. Based on these analyses, I feel that FDI takes an important role to both foreign and host countries and also encroachment firm behaviour or effects on host economies. entrywayThis report will discuss Foreign Direct Investment theories and evaluate the FDI of a leading player industry that chosen, Toyota, japan. Foreign direct investment (FDI) is the name given to process where a firm from a country provides capital to an existing or newly-created firm in another country (Jones, 2006 1). For example, a foreign firm may find out to set-up production in the UK and by so doing will engaging in the process cognize as FDI. Firms locating production in more than one country are often referred to as multinational enterprises (MNEs). Dunning (1981) notes there are two main problems with viewing FDI. First, FDI is more than just the transfer of capital, since just as importantly it involves the transfer of technology, management and organizational skills. Second, the resources are transferred within the firm rather than between two independent parties in the market place, as is the case with capital (Jones, 2006 1 ). These factors give FDI own a unique key theories and often cited as Hymer (1960) international operations of national firms Vernons (1966) product life-cycle theory Caves (1971) horizontal and vertical theories Buckley and Casson (1976) Internalization theory Dunning (1977) eclectic theory Graham (1978) strategic behavior of firms and John Dunning (1981) investment development path (integrated data processing) theory. This report will begin by examining the Hymer (1960) theory.(Keywords Foreign Direct Investment, FDI, theory, Japan FDI, Honda) domainations Review1.1 Hymer (1960) international operations of national firmsHymers (1960), who saw flaws in the pre loom view that direct investments and portfolio were synonymous with one another. Hymer noted that direct investment was mainly performed by firms in manufacturing, whereas there was a predominance of financial organisations involved in portfolio investment (Jones, 2006 1). Hymer was also explained why direct investments c rosswise various countries (Kogut, 1998 2). Hymer (1960) expressed his dissatisfaction with the theory of indirect (or portfolio) capital transfers to explain the foreign value-added activities of firms (Dunning, 2008 3). In particular, he identified three reasons for his discontent. The first was that once suspicion and risk, the cost of acquiring information and volatile exchange rates and making transactions were incorporated into classical portfolio theory, many predictions, for example, with respect to the cross-border movements of money capital in response to interest rate changes, became invalidated. This was because such market imperfections limited the behavioural parameters affecting performance of firms and the conduct and, in particular, strategy in servicing foreign markets (Dunning, 2008 3). Second, Hymer stated that FDI involved the transfer of a software program of resource (i.e technology, entrepreneurship, management skills, and so on), and not just finance capit al which portfolio theories such as Iversen (1935) had sought to explain. The third and perhaps most thoroughgoing characteristic of FDI was that it involved no change in the ownership of resources or properlys transferred, whereas indirect investment, which was transacted through the market, did necessitate such a change. In consequences, the organisational mood of both the transaction of the resources, for example, intermediate products, and the value-added activities associate by these transactions was different. Moreover, Hymers theory of FDI draws its influence from Bains (1956) barriers to entry model of industrial economics (Teece, 1985). Hymer begins by noting that there are barriers to entry for a firm wanting to set-up production abroad. These are in the form of unsurety, risk, and host-country nationalism (Kogut, 1998 2). Uncertainty gives rise to costs in overcoming informational disadvantages associated with unfamiliarity with local customs. Each country has its ow n languages, legal system, economy and government, which place firms from outside of the country at a disadvantage compared to firms that are naturally resident to the country. The second barrier is nationalistic discrimination by host countries, which may occur by the government with a protectionist agenda, or by consumers of the host country who prefer to purchase goods from own national firms for reasons of patriotic or loyalty tendencies. The final barrier manifests itself as an exchange rate risk (Kogut, 1998 2). As the firm has to pay a dividend to its shareholders in the home country it has to repatriate the profits back to its own currency. stipulation these barriers to international productions, why do firms accept in foreign direct investment? According to Hymer there are two reasons, whether of which could apply, and both of which are expected to increase its profits (Kogut, 1998 2). First, the firm removes competition from within the industry, by taking-over or by mergi ng with firms in other countries. Second, the firm has advantages over other firms operating in a foreign country. Examples of the latter are the ability of the firm to acquire factors of production at a swallow cost, the use of better distributional facilities, the ownership of knowledge not cognize to its rivals or a differentiated product that is now cognise in the other country. Both reasons stress the importance of market imperfections (Dunning and Rugman, 1985), and underlying these the investor has direct control of the investment.Overall, these reasons are not sufficient for a firm to engage in direct foreign investment, as what is necessary is that it must enter the foreign market in order to fully appropriate the profits, for example, a firm could license its product to a firm in the foreign country, so that it need not without delay invest in the market. However, there are problems with licensing the product. These include the failure to reach an agreement with the li censing firm over the levels of output or prices, or the costs involved in the supervise an agreement do between the firms.1.2 Product Life-Cycle TheoryVernon (1966), argued that the decision to locate production is not made by standard factor-cost or labour-cost analysis, but by a more complicated process (Kogut, 1998 2, p.29). The product cycle model was introduced in the 1960s to explain market-seeking production by firms of a particular ownership or nationality (Dunning, 2008 3). On the other hand, the product cycle was the first active interpretation of the determinants of, and relationship between, international trade and foreign production (Dunning, 1996 5). It also introduced some novel hypotheses regarding demand stimuli, technology leads and lags, and information and communication costs, which have subsequently proved useful tools in the submit of foreign production and exchange (Dunning, 1996 5). According to Vernon, a product has a life cycle that has three main stag es. These stages are important as they have implications for the international location of a product as follows. spirit level One Product development process. In other words, the nature of the product that the firm is making is not standardised (Kogut, 1998 2).Stage Two Maturing product. This means that the need for the product to be situated near to its market declines, which allows for economies of scale. These tinct on the locational decision of the firm, especially as the demand for the product is probably to grow in other countries, and the firm will have to decide whether it is worth setting up production abroad. Furthermore, this could even mean that the home country experiences exports back to it from the foreign plant.Stage Three Standardised product. This is an extension service to the maturing product stage, where the standardisation of the product has reached its zenith, and a final framework of the product has been found (Kogut, 1998 2).1.3 Caves TheoryCaves (1971), expanded upon Hymers theory of direct investment, and placed it severely in the context of industrial organisation theory (Jones, 2006 1). The importance of Caves work is that this theory will linked Hymers theory of international production to the consequently current theories of industrial organisation on horizontal and vertical integration. Caves identify between firms that engage in horizontal FDI and those that undertake vertical FDI (Dunning, 2008 3). even FDI takes place when a firm enters into its own product market within a foreign country, whereas vertical FDI happens when a firm enters into the product market at a different stage of production (Jones, 2006 1).1.4 Internalisation TheoryCoase (1937), examines the role that transaction costs play in the formation of organisations known as internalisation theory (Jones, 2006 1). In brief, Coase was concerned with why firms exist and why not all transactions in a n economy occur in the market. Coase also answered this in p rice of the transactions costs involved in using the market, where this is the cost of searching and determining the market price, or, once the price is found, the cost of negotiation, signing and enforcement of contracts between the parties involved in the transaction. The process of internalisation is developed to explain international production and FDI, and one of the leading proponents is Buckley and Casson (1976). They present the MNE as essentially an extension of the multi-plant firm (Dunning, 2008 3). Bucley and Casson note that the operations of firm, especially large firms, take the form not only of producing services and goods, but activities such as marketing, training, development and research, management techniques and involvement with financial markets. These activities are interdependent and are connected by intermediate products, taking the form of either knowledge or material products, and expertise. A key intermediate product in the internalisation theory of FDI is knowledge. One reason is that knowledge takes a considerable period of time to generate, for example through development and research, but is highly risky, so that futures markets do not exist. Sellers of markets may be unwilling to disclose information, which has uncertain value to the buyer, causing market fail. Further, sellers and buyers of knowledge can often hold a point of market power, which leads to a bilateral concentration of power (Williamson, 1979), and uncertain outcomes (Dunning, 2008 3). These problems indicate the severe difficulties in licensing and contracting where information is crucial.In regards to internationalisation, the public good property of knowledge means it is easily transmitted within the firm, regardless of whether it is inside or across national boundaries. This creates internal markets across national boundaries, and as Buckley and Casson state, as firms search for and exploit knowledge to their utmost potential they do so in numerous locatio ns, with this taking place on an international scale, leading to a network of plants on a world-wide basis (Jones, 2006 1, p.45). The internalisation theories of FDI played an important role in locomote and ontogenesis the theory of FDI in the seventies and have preserveed popular since that time (Dunning, 2008 3).1.5 The Eclectic Paradigm(Please refer to table 2.1 and 2.2 in reading this section)Reflecting upon the record of the theory of FDI, Dunning (1977) noted that it was very much couched in terms of either the structural market failure hypothesis of Hymer and Caves or the internalisation approach of Buckley and Casson (Dunning, 1996 5). Dunning provided an eclectic response to these by bringing the competing theories together to form a single theory, or paradigm as it is more often referred. The basic premise of Dunnings paradigm is that it links together Hymers ownership advantages with the internalisation school, and at the same time adds a locational dimension to the th eory, which at the time had not been fully explored (Jones, 2006 1). Further, Dunning does manage to introduce some new considerations, such as the impact that different country and industry characteristics have on each of the ownership, locational and internalisation advantages of FD (Jones, 2006 1).The eclectic paradigm of FDI states that a firm will directly invest in a foreign country only if it fulfils three conditions. First, the firm must possess an ownership-specific asset, which gives it an advantage over other firms and which are exclusive to the firm. Second, it must internalise these assets within the firm rather than through contracting or licensing. Third, there must be an advantage in setting-up production in a particular foreign country rather than relying on exports (Blomstrom, 2000 8). Different types of ownership (O), locational (L) and internalisation (I) factors are given in Table 1 (collectively known as OLI) (Jones, 2006 1).Internalisation advantages are the w ays that a firm maximises the gains from their ownership advantages to avoid or overcome market imperfections (Dunning, 1996 5). Internalisation-specific advantages results in the process of production becoming internal to the firm. Reasons for internalisation include the avoidance of transaction costs, the protection of the good, market and finance, avoidance of tariffs and the ability to overhear economies of scale from production (Dunning, 2008 3).Moreover, not all of the OLI conditions for FDI will be equally spread across countries, and therefore each condition will be determined by the factors that are specific to individual countries (Dunning, 1996 5). Links between the OLI advantages and the country-specific characteristics are summarised in Table 2. For example, the ownership-specific advantage of firm size is potential to be influenced by market size in the firms home country (Dunning, 1996 5). This is because the larger the market is, the more promising will a firm be able to gain ownership-specific advantages in the form of economies of scale. In terms of location-specific factors, labour costs will vary across developed and development countries, while transport costs are determined by the outdo between the host and home countries. Finally, country-specific factors are likely to affect the degree to which firms internalise their advantages.1.6 Strategic Motivations of Foreign Direct InvestmentDespite the advances made by the eclectic approach to FDI, the theory has been criticised for ignoring another aspect of FDI theory. Knickerbocker (1973), and then advanced by Graham (1978, 1998). The distinguished feature of the strategic approach to FDI is that is believes that an initial inflow of FDI into a country will produce a reaction form the local producers in that country, so that FDI is a dynamic process. The process from the domestic producers can either be aggressive or defensive in nature. An aggressive response would be a price war or ent ry into the foreign firms home market while a defensive response would be an acquisition or uniting of other domestic producers to reinforce market power (Dunning, 1996 5).1.7 Investment festering Path TheoryJohn Dunnings investment development path (integrated data processing) theory (1981) and its latest version (Dunning an Narula 1994) are implicitly built on the notion that the global economy is necessarily hierarchical in terms of the various stages of economic development in which its diverse constituent nations are situated. The IDP essentially traces out the net cross-border flows of industrial knowledge, the flows that are internalised in foreign direct investment (FDI) and that restructure and upgrade the global economy, although there is also the non-equity type of knowledge transfer such as licensing, turn-key operations, and the like. In this way, the IDP can thus be view as a cross-border acquirement curve exhibited by a nation that successfully move up the stages o f development by acquiring industrial knowledge from its more advanced neighbours. A move from the U-shaped (i.e negative NOI) portion to the wiggle section of the IDP indicates an equilibration in knowledge dissemination (Dunning, 1996 5, p.143) and that is, a narrowing of the industrial technology gap between the advanced and the catching-up countries. Thus, IDP curve conceptualised by Dunning is an consider pattern based on free-market exchanged of knowledge among countries (Dunning, 1996 5).Japan self-propelled Industry2.1 Components-intensive assembly-based manufacturing and FDI(first, trade-conflict-skirting, but later rationalising type)Automobiles and auto-parts had long been targeted by the Japanese government as one of the most promising industries in which both higher technological progress and productivity were possible and whose products were highly income elastic. In sum to automobiles, another components-intensive, assembly-based industry that successfully emerged in Japan in the 1970s was consumer electronics (Dunning, 1996 5). Both automobiles and consumer electronics came to capitalise very adroitly on Japans dual industrial structure in which numerous small and medium-sized enterprise coexisted alongside a limited number of large-scale firms the former specialised at the relatively labour-intensive end, while the latter operated at the relatively capital-intensive, scale-based end of vertically integrated manufacturing (Dunning, 2008 3).Furthermore, it was also in Japans auto industry (at Toyota Motor Co., to be exact) that a new manufacturing paradigm, lean or flexible production, originated as a superior alternative to Fordist mass production (Womack, Jones and Roos, 1990). This technological progress came to be reflected in rising technology exports in the transport equipment (mostly, automobile) industry. But the very success of building up the efficient, large-scale (hence exploitative of scale/ chain economies) hierarchies of assemb ly operations in highly differentiated automobiles and electronics goods, along with change magnitude RD and technological accumulation (which is reflected in increasing technology exports), resulted in Japans export drive and expanding trade surplus. These situations in turn quickly led to trade issues and the sharp appreciation of the yen (Dunning, 2008 3).To circumvent protectionism, Japanese producers of automobiles and electronics goods began to replace their exports with local assembly operations in the Western markets, mainly in conglutination America and Europe. Meanwhile, they also started to produce fairly standardised (ie. Relatively low value added) parts and components, or those that can be cost-effectively produced, locally, both in low-wage developing countries, especially in Asia, and in high-wage Western countries- in the latter, with the installment of labour-cost-reducing and labour-quality-augmenting automation equipment mostly shipped from Japan. Therefore, a network of Japanese overseas ventures began to wander the advanced host countries and the developing host countries at the same time (Dunning, 2008 3).Recently, these assembly-based FDIs are going beyond the trade-conflict-skirting phase to reach a new phase of rationalised cross-border production and marketing. More and more components are produced at supplied home to the overseas manufacturing outposts. Also, low-end products (models) are assigned to production and marketing in the developing host countries, especially in Asia some are imported back into Japan. Thus, we can discern a more refined or more sharply delineated and specialised form of trade within an industry (i.e intra industry) or more appropriately within a firm (i.e intra- firm trade) and within a production process (i.e inter-process trade), a new form of trade made possible by rationalisation-seeking type of FDI (Dunning, 1996 5).2.2 Toyota(Please refer to concomitant 1 2 in reading this section)The Japanese market is the most consolidated of all triad markets. Toyota, is a transnational Japanese international car manufacturer where headquartered in Aichi, Japan (Dunning, 2008 3). According to appendix 1, in 2011, Toyota was the fifth biggest transnational companies with foreign sale as 60.8 percentage of total. Also, it has 38% of its 326,000 workers abroad (Economist, 2012 7). In 2009, Toyota alone has 36.88 percent of the passenger car market, 18.29 percent of the truck market and 79.72 percent of the bus market (M.Rugman, 2012 6). Excluding Japan, Toyota is the market loss leader in two of the six largest countries in Asia Pacific which are Malaysia and Thailand (M.Rugman, 2012 6). Furthermore, in 2009, two regional markets accounted for 78 percent of Toyotas revenue Asia (with Japan at 48.3 percent of revenues) and northwestern America (at 29.70 percent of revenues) Europe was only at 14.1 percent of revenues and rest of the world 7.9 percent, and hence, it is a bi-region-focuse d company. According to appendix 2, In term of units sold, the geographic distribution is similar where Asia and Oceania account for 14 percent, North America 32 percent and Europe 14 percent. Therefore, in terms of revenue and units sold, Toyota is a bi-regional company (Dunning, 1996 5) .Over 10 years, Toyotas intra-regional percentage of sales has decreased from 57.1 percent to 46.2 percent. One major reason for this is the Japanese market itself, where sales decreased for 48.4 percent of total revenues in 1993 to 38.3 percent in 2002. As comparison, North American, European, and non-triad sales have steadily increased in importance. Toyota manufactures locally over two thirds of the car sells in United States. local anaesthetic responsiveness is important for Toyota. Toyota introduced its luxury models to accommodate the wealthier and aging North American baby boomers in the 1990s. Today, the company is introducing cars to target the two-year-old American customer, the demogr aphic echo of the baby boomers. Since 60 percent of US car buyers remain loyal to the brand of first car, it is thus imperative to service this young market (M.Rugman, 2012 6).Furthermore, american consumers, have been responsive to the companys reputation for lower price and quality at which Toyotas cars are sold (M.Rugman, 2012 6). Also, the resale value is also higher for Toyota cars. One major advantage for Toyota is that is has some of the best manufacturing facilities in the world, and it combine this with excellent relationships with its suppliers. Until recently, Toyota was one of the most efficient companies at outsourcing production to suppliers with whom it enjoys amicable long-term, sometimes keiretsu-style, relationship (Dunning, 2008 3). If the auto industry is to become more like the electronics industry, vehicle brand owner (VBOs), such as GM, and VW, will be the equivalent of original equipment manufacturers (OEMs) in the electronics industry, such as Nokia, and w ill sharpen on designing, engineering, and marketing vehicles to be sold under their brand while others take care of manufacturing (Dunning, 1996 5). Toyota is probably further along this outsourcing route than other triad auto makers.Overall, although Toyota has much intra-regional trade and FDI, this does not mean that trade or FDI between them has declined (M.Rugman, 2012 6). As discussed, all of them have invested large amounts of money in each other. For example, in 2008, the EU country has $1,622.911 one million million of FDI in the United States and $86.915 billion in Japan. The United States imports $377 billion from the EU and $143.4 billion from Japan. So they are closely linked in terms of both trade and FDI (M.Rugman, 2012 6).3. ConclusionsOverall, this report has reviewed the theoretical literature on foreign direct investment and Honda automotive in the FDI international markets. Since Hymer, there have been attempts to underwrite a number of issues, such as why FD I occurs and where it locates. This report has also take on board developments in Dunnings eclectic paradigm of FDI, which not only encompasses ownership and internalisation advantages of multinational enterprise, but the role that location plays in a firms decision to invest abroad. Since the time of the eclectic paradigm, other theories have emerged that have stressed the importance of the role of strategy in FDI in the face of globalisation and a corresponding growth in competition between firms. In this, the role of the traditional barriers to entry across countries, such as the differences in the legal, economic environments and linguistic, have become less important, and FDI is now be viewed as competition between a few firms on an international stage (Dunning, 1996 5). Dunnings IDP paradigm provides a ambitious framework to examine the Japanese industry experience, because the case of Japan seems so deviant from the norm set forth in the macro-IDP pattern. The Asian NIEs and the new NIEs (ASEAN-4) and now new new NIEs (China, Vietnam and India) have moulded their developmental strategies along the line of MNE- facilitated development in order to swing up. Indeed, Japan automotive seems to have been a role model for other East and South East Asian countries to match in their drive to economic modernisation.In addition, to the high level of international business conducted across the triad, companies in the triad are constantly looking for new ideas from other regions that will make them more competitive. In the United States, for example, the head of the Federal Reserve System has expressed the belief that US antitrust practices are out of date and that competitors should be allowed to acquire and merge with each other in order to protect themselves from world competition (Dunning, 2008 3). This idea has long been popular in Japan where Keiretsus, or business groups, which consist of a host of companies that are linked together through ownership and/or joint ventures, dominate the local environment and are able to use their combined connections and wealth to dominate world markets.(2000 words)Table 1The Three Conditions of the Eclectic TheoryOwnership-specific advantages (internal to enterprises of one nationality)Size of firmTechnology and trade marksManagement and organisational systemsAccess to spare capacityEconomies of joint supply great access to markets and knowledgeInternational opportunities such as diversifying riskLocation-specific advantage (determining the location of production) dispersal of inputs and marketsCost of labour, transport and materials costs between countriesGovernment intervention and policiescommercial and legal infrastructureLanguage, culture and customs (ie psychic distance)Internalisation-specific advantages (overcoming market imperfections) decrement in search, negotiation and monitoring costsAvoidance of property right enforcement costsEngage in price discriminationProtection of productAvoidance o f tariffsSource Dunning (1981)Table 2Characteristics of Countries and OLI-specific AdvantagesOwbnership-specific advantagesCountry characteristicsSize of firmLarge marketsLiberal attitudes to mergersTechnology and trade marksGovernment support of innovationSkilled workforceManagement and organisational systemsSupply of trained managers.educational facilitiesProduct differentiationHigh income countriesLevels of advertising and marketingLocation-specific advantagesCountry characteristics be of labour and materialsDeveloped or developing countryTransport costs between countriesDistance between countriesGovernment intervention and policiesAttitudes of government to FDIEconomies of scaleSize of marketsPsychic distanceSimilarities of countries languages and cultures.Internalisation-specific advantagesCountry characteristicsSearching negotiating monitoring costs.Greater levels of education and larger markets make knowledge type ownership-specific advantages more likely to occur.Avoid costs of enforcing property rights.Protection of products.Source Dunning (1981)Appendix 1CUsersuserDesktop20120714_woc582_5.png