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Privatization and Foreign Investment

Privatization and Foreign Investment. To decrease costs some governments are trying to eliminate operating costs by privatization. Privatization : the selling of a public service, such as electricity or health care, to a private company so that the service is no longer owned by the government. .

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Privatization and Foreign Investment

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  1. Privatization and Foreign Investment

  2. To decrease costs some governments are trying to eliminate operating costs by privatization. • Privatization: the selling of a public service, such as electricity or health care, to a private company so that the service is no longer owned by the government.

  3. Trade liberalization advocates believe that privatization • 1.) lowers taxes because it no longer needs to be paid by tax payers • 2.) Competition results in improved quality and lower prices

  4. Opponents believe that privatization: 1.) Make services more expensive, since companies must turn a profit 2.) Does not benefit everyone, just those than can afford it.

  5. Privatization of Water • World Bank is encouraging some countries to privatize water. • Fortune Magazine Proposed that water resources is “one of the worlds great business opportunities”

  6. IMF Water Resource Management Strategy: “Water resources management is a highly political topic and planning and implementation needs to explicitly address the political economy of reform. The art of reform is in picking the low-hanging fruit first, recognizing broader reforms outside of the water sector (often relating to overall economic liberalization, fiscal and political reform), and recognizing that those who are willing to change must be supported.” IMF Website

  7. 2 Types: 1.) Physical Water Scarcity: When the demand for water outstrips the lands ability to provide the needed water resources. 2.) Economic Water Scarcity: when human, institutional or financial capital limit access to water even though water is found naturally in the region.

  8. Dead Sea • Due to increased human consumption the Dead Sea is decreasing 1 meter every year. • The Six Day War in 1967 was caused by water scarcity in the region. • Jordan and Egypt have said that they would not go to war unless it was to protect their water resources

  9. Privatization can lead to high prices and not everyone receiving access to water. • Some farmers cannot irrigate, crop yields decrease • May one day result in a series of water wars, as clean water becomes scarcer more and more countries will try to gain access through military means • Or can be taken through the use of NGO’s

  10. Water Privatization In Canada

  11. Foreign Investment • The purchase of assets of one country, by individuals, intuitions or governments of another country. • Many see it as a way to stay competitive and more stable while increasing trading ties with other countries.

  12. Risks of Foreign Investment • There is always the risk that investors will pull their money out • Ex: south Korea in 1997. Had 11th largest economy, currency decreased rapidly, government eventually had to borrow 58 billion from IMF. Investors lost billions of dollars • Foreign investment means a country loses certain control over valuable resources and technology. Ex: oilsands

  13. Foreign Investment in Kurdistan • During Saddam Hussein Rule over 100 000 Kurds were killed • Since the American Invasion, Kurdistan is its own autonomous region and is currently looking for foreign investment. • It needs outside money to be able to stimulate the economy and provide money for infrastructure, job creation etc...

  14. China • Starting from a baseline of less than $19 billion just 20 years ago, foreign investment in China has grown to over $300 billion • Economy continues to grow

  15. 81 percent of respondents reported that their company's China operations are profitable • Special tax incentives for foreign investments in the SEZs. • Greater independence on international trade activities. • SEZs are listed separately in the national planning (including financial planning) and have province-level authority on economic administration. SEZs local congress and government have legislation authority.

  16. Economic characteristics are represented as "4 principles": • Construction primarily relies on attracting and utilizing foreign capital • Primary economic forms are sino-foreign joint ventures and partnerships as well as wholly foreign-owned enterprises • Products are primarily export-oriented • Economic activities are primarily driven by market forces

  17. http://www.youtube.com/watch?v=if5ww5xgEUQ&feature=related • one drop • http://www.youtube.com/watch?v=Ikb4WG8UJRw&feature=related • Part 1 • http://www.youtube.com/watch?v=vLp1ZnjsIXc&feature=PlayList&p=E0928D7E2EEB5A59&playnext_from=PL&playnext=1&index=6

  18. Girl • http://www.youtube.com/watch?v=6Sb6RmRMbBY&feature=fvst • Flow • http://www.youtube.com/watch?v=ZFJP1MArY74 • Water Wars • http://www.youtube.com/watch?v=aTKn17uZRAE

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