emergence of fdi in cee and its effects on food supply
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Emergence of FDI in CEE and its effects on Food supply. Dimuth Nambuge Assistant Professor Department of Economics Slovak University of Agriculture Nitra [email protected]. Foreign Direct Investment. What Foreign direct Investment? - PowerPoint PPT PresentationTRANSCRIPT
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Emergence of FDI in CEE and its effects on Food supply
Dimuth NambugeAssistant Professor
Department of EconomicsSlovak University of Agriculture Nitra
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Foreign Direct Investment
What Foreign direct Investment? Key terminology is – the “controlling interest” in
a foreign company. Does not need to be 100% ownership.
Importance of FDI Host country Ownership country
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Factors to consider when entering a foreign market as direct investment
P - Political E - Economical S - Social T - Technological L - Legal E - Environmental C - Cultural
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CEE economic reforms
Spontaneous privatization 1989 - 1991 Privatization 1992 - 1995 Concentration begins 1996 - 2000 Accelerated concentration 2001 -
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Spontaneous privatization 1989 - 1991
The period of spontaneous privatisation happened in 1989-1990, when the smaller shops were privatised, but when a significant number of private shops were established as well. Therefore the number of food retail shops started to grow.
Prior to the period food chains were vertically Integrated
Acquisitions and joint ventures in core products groups
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Privatization 1992 - 1995
During the period of privatization (from 1991 to about 1995-96) the owners of the larger food retail chains have been changed. Most of the shops in the favourable areas have become the properties of multinational chains.
Some SME’s developed Some were bankrupt Large western companies concentrated on post
acquisition issues; Distribution, brand positioning, pricing strategy
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Concentration begins 1996 – 2000Accelerated concentration 2001 -
During this period number of self employed shops grew up.
Rationalization of manufacturing/ market strategy for “NEW EUROPE”
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Transition period and entering these markets
Transition period (1989- 1995) negative GDP growth.
Higher level of poverty and unemployment. Entry costs were minimum Entered mainly through acquisitions. Anti dumping policies
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Comparative market entry in different regions
North
America
(300milli
on populatio
n
•Major brands well established•Maximum economy of scale•Costly advertising campaigns•Mature markets•Expensive listing costs
Western
Europe
(350 milli
on populatio
n
•Major brands well established•Maximum economy of scale•Costly advertising campaigns•Mature markets•Expensive listing costs
Eastern
Europe
(400 milli
on peopl
e)
•Most deals for 25 – 70 percent market share in major product groups have been attained to 3 to 40 billion dollars
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Benefits from FDI
Knowledge spill over High quality standards (ISO 22000 series) High safety standards (HACCP) Technological Transfers Production line efficiencies Increased yields through reserach Environmental concerns
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Current situation of FDI in CEE
Tax holiday incentives Government and EU grants Buyouts of small farms
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Investment announcements in the CEE region (number of projects)
Source: FDI markets, Financial Times, 2009, January
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PERSPECTIVES AND IMPLICATIONS FOR POLICY-MAKERS OF THE
RESTRUCTURING OF SUPPLY CHAINS
Wholesale markets Market Information Systems (MIS) Measuring International Competitiveness Improving market access to the supply
chains of multiple retailers Human Capital Improving access for small farms Stimulating intermediary organizations and
marketing cooperatives
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Conclusions
Discuss