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Research Proposal

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Establishing the Determinants of Outward-FDI (OFDI) From Germany and the Significant Impacts to the German Economy

This particular research study will study outflow of FDIs in Germany. In Germany today, a vast number of foreign investors are opting to close their ventures and shifting to other countries across the world. In the year 2011, it was reported that at least 15% of foreign investments were shifted to other countries in Europe, America and Asia from Germany. In 2012, there was even a further increase of FDI outflows in Germany and this was reported to be 18%. Citing such trends, industrial analysts projected a 20% increase in outflow of foreign direct investments in Germany. Garretsen and Peeters (2009, p. 325) indicate that the rate at which FDI inflows in Germany is slightly above the FDI outflows in Germany. This is a grave concern and a myriad of research studies have been conducted in order to investigate on the issue and perhaps offer a viable solution to the German government. However, despite their motivated and dedicated efforts, these researcher and their research studies have not been quite successful (Liebscher, Christl, Mooslechner and Ritzberger-Grünwald, 2007, p. 72).  Their research findings depict loopholes and it is these gaps that this research aims at solving. If the motives of this research are achieved, they will contribute to the closure of these gaps and as well facilitate the comprehension of ontological and epistemological worldview of the policy makers entangled in the contemporary status of Foreign Direct Investment in Germany.

Question/problem

This research study aims at establishingthe determinants of outward-FDI (OFDI) from Germany and the significant impacts to the German economy. Lenihan, et al. (2010, p. 169) identifies that with such a high rate of FDI outflow in Germany, it follows that there must be some specific motivators. During the past ten years, the FDI market scene has been dramatic. At one point of time during this particular period, Germany was perceived to be a very viable destination for Foreign Direct Investments.  As such, Germany market was among the highest ranked by foreign investors and this was the root of their preference of the market. However, this scenario changed in the onset of 2009 when FDIs in the country gradually started streaming out of the country and opting to invest elsewhere, the most common destination being Asia. Following this upsurge, Sethi, Guisinger, Phelan and Berg (2003, p. 315) identified that other markets, particularly those in the Asian continent began booming with Foreign Direct Investments. Indeed, such countries as the United Arab Emirates have experienced increased economic developments and they have seemingly overtaken Germany as an economic superpower. On the other hand, due to the outflow of these FDIs, Germany has been hit especially considering its economic status (Bradbury-Jones, Irvine &Sambrook, 2010, p. 30). This problem must be solved if at all the country aims at avoiding further downfall. Therefore, by establishing the determinants of outward-FDI (OFDI) from Germany and the significant impacts to the German economy, the country will be placed in a position from which it can fix things. To realize this particular aim, the researcher has developed several sub-questions. These will include;

  1. What are the employment effects of the Outward-FDI? 
  2. What implications would this outwards-FDI have on the German country’s long-term economic growth?
  3. What does FDI outflow in Germany mean to the government of Germany?
  4. What are the characteristics of German OFDI?

Research Hypothesis

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This particular research study is characterized by two particular research hypotheses.

H 1, the determinants of FDI outflow in Germany are economic related.

H 2, Due to the FDI Outflow in Germany, the country suffers dramatic economic downturns.

Significance

The successful completion of this particular study will be of critical importance to the German fraternity and the world of business in general. Previously, there have been studies conducted on the same topic area. While they have contributed towards the existing knowledge, Scott (1993, p. 32) identifies that there are still loopholes and gaps in those researches that needs to be filled. Batrakova and Davies (2012, p. 88) cite that if those researches were adequate enough, at least, the rate of FDI outflows in Germany would have been somehow contained this far. However, this has not been the case. This is a clear implication that there is a need for more information regarding the same that will result to the problem being solved. This sets the platform for explaining the significance of this particular research study. As such, by completing the study successfully, knowledge regarding the determinants of outward-FDI (OFDI) from any particular country and the significant impacts to an economy will be increased and this will be of help to Germany and other countries experiencing the same problem (Burns & Grove, 2009, p. 38). During the conduction of the research, reference will be made to Germany since it is the contry under study. However, the recommendations will be applicable to any particular nation. Besides the existing knowledge on the same, Germany will be able to use this research to curb the existing situation. Therefore, this research is essentially fundamental.

Primary resources

To realize the objectives of this research study, it will be necessary to collect data, which will then be analyzed. Primary data will be the main data to be used in this research study. Primary data refers to data collected from the sample population through the use of data collection instruments such as observation and questionnaires. Therefore, the primary data for this research study will come from the participants of the study selected by the researcher.

Secondary data

This refers to the data inferred from sources other than the study participants such as scholarly books, articles and peer reviewed journals. This research will also utilize the secondary data alongside primary data. Based on the definition above, the additional data for this study will come from school scholarly books, articles and peer reviewed journals related to the topic of study. To be precise, the secondary data will be achieved through a review of literature.

Methods

Introduction

This chapter provides a clear definition and explanation of how the researcher will carry out the research study. Within the chapter, the researcher will outline and discuss the most appropriate methods of design, selection of the study sample, collection of data and analysis. In addition to this, the researcher will give a description of ethical considerations required in order to complete this research study successfully.

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Research design

Parahoo (2006, p. 88) claims that the design selected for a research study to be the most suited in order to realize the objectives. For the purpose of answering the proposed research question, the researcher has identified a descriptive qualitative research design to establish the determinants of outward-FDI (OFDI) from Germany and the significant impacts to the German economy. Burns and Grove (2009, p. 67) define a qualitative research as systematic, subjective approach towards describe the life experiences, as well as, giving them meanings. Holloway and Wheeler (2002, p. 55) indicated that by opting to conduct a qualitative research study, a researcher is allowed to explore the behaviors, feelings, perspectives, as well as, the experiences in depth, complexity and quality of a certain situation through a holistic framework.Brabury-Jones et al. (2010, p. 90) indicated that a descriptive design seeks to describe the critical findings in a rigorous manner, which is not only free from bias but distortions, as well. Descriptive research studies oftentimes assist is discovering new meanings, providing an explanation regarding the nature of existence of a situation, according to Cohen, Manion and Morrison (2007, p. 77), verifies the rate of something occurring and seek also to categorize information. In this regard, the researcher aims at achieving the identification of issues with the current practice.

Study sample

The researcher aims at acquiring a purposive sample by recruiting foreign direct investments that have moved out of Germany in the past two years. According to Cormack (2000, p. 150), a good qualitative research study is the one that uses a small sized sample owing to the in-depth nature of a qualitative study, as well as, the analysis of the required data. As the researcher aims at acquiring a purposive study sample, he will establish an inclusion and an exclusion criteria and requirements.

Inclusion criteria

-    A maximum of 150 FDIs that have moved out of Germany in order to assist the researcher in gaining a detailed account of the responses and additionally allow for huge amounts of information for the purposes of analysis.

-    FDI outflows in Germany for the past two years so as to obtain information regarding the recent determinants of the outflow and the recent economic effects to the country.

While it may be a daunting task to locate the whereabouts of these FDIs, the researcher will seek help from the officials of the ministry of trade and industrialization. As such, the ministry of trade will have records of these companies and through search Engines such as Google, the researcher will be able to locate them.Before embarking on the study, the researcher will send emails to all the identified stakeholders requesting permission to carry out the study. In the emails, the researcher will provide a short description of the aims of the study, what the participation will entail, the rights of each participant, a short but precise discussion regarding how confidentiality will be observed and the contact details of the researcher. This will allow the participants to clarify any queries arising (Robson, 1993, p. 101).  The researcher will then send the participants a consent form, which the participants will be requiired to read, sign and then send it back. The researcher will then allow a period of two weeks before selecting the final participants on the basis of the stipulated criteria. The two weeks period will serve to ensure that there is adequate time on the part of the participants to make decisions regarding their participation and to allow clarification.

Data collection

To obtain the necessary data for analysis he researcher will use a questionnaire. The questionnaire will be constituted of open-ended, semi-structured and in-depth questions.  A questionnaire is an efficient data collection tools as it allows the participants of a study to express their views, perceptions, opinions and experiences in a detailed manner. This is especially so if the questionnaire carries open-ended questions as opposed to closed-questions. The questionnaire will be divided into two sections. The first will seek to obtain personal information. The second part will be more purposive as it will seek to establish the determinants of outward-FDI (OFDI) from Germany and the significant impacts to the German economy (Burton & Bartlett, 2009, p. 44). The process of data collection will be carried out for a period of one month considering that the FDIs to be sought are spread throughout the world. Therefore, adequate time must be allowed. The questionnaires will be sent to the participants through emails.

Analysis of data

According to Polit and Beck (2008, p. 138), data analysis in a research study aims at organizing, providing a structure to, and eliciting meaning of the research data collected. As Burns and Grove (1999) put it, qualitative data analysis takes place in three particular phases and these include description, an analysis and interpretation.

The researcher will carry out the process of data analysis using a simple regression analysis method. Bassey (1999, p. 119) defines it as a statistical technique used to estimate the relationship among the variables of a research study. Through a simple regressionanalysis, the researcher will be able to determine the relationship between the identified dependent and the independent variable and through this, he will be able to evaluate the effects of each determinant in terms of whether or not they are enablers or barriers to the Outflows of FDI in Germany.

Ethical considerations

The most fundamental ethic attributed to the data collection method chosen by the researcher is confidentiality. As such, the researcher has to ensure that the confidential information that the respondents of my research study will provide is maintained. To do this, he must ensure anonymity (Clough &Nutbrown, 2007, p. 99). As such, the research respondents will not be required to indicate their names. Where they indicate, the data collection materials will be safely disposed after the successful completion of the study to ensure that the information does not get to the third parties, which is detrimental to the respondents and to the researcher.

Justification

Based on the intentions of the researcher, a qualitative research study is the most appropriate paradigm for the research study. Among the critical advantages of using questionnaires is that is that through it, the subtlety, as well as, the ‘embededness’ of truths can be recognized. Therefore, it is the best methodology for achieving the requirements of the form of data that the researcher aims at collecting (Clough &Nutbrown, 2007, p. 111). 

In addition to this, there is an evaluative aspect of the research study. Using the identified methodology, the researcher will be able to elicit an understanding of what is happening within the particular case under study.

Moreover, the data to be collected will inevitably be a fraction amount of the data that could possibly be collected. Therefore, the researcher has to bear in mind that the research can only capture what is most useful and meaningful within a relatively short time-scale in any one instance of collection of data (Bell, 1987). The decisions that the researcher has to make for the most appropriate methodology and methods to be used ought to account for the complex reality of this research. Additionally, it inevitably links into the manner we construct meaning into what surround usin an effort towards making sense of what is happening (Ely, Anzul, Friedman, Garner & Steinmetz, 1991, p. 91).This therefore, affirms the necessity of the adopted methodology.

Limitations

There are some matters that the chosen methodology may not help the researcher explain. These might include the psychological motives of FDI outflow from Germany, as well as, the psychological effects of the German population. Besides the determinants of the outflow and the economic effects, there are the psychological motivators of foreign direct investors moving out of Germany and the psychological effects that the natives of the German society might have due to the outflow. The identified methodology cannot establish such psychological attributes, which might, as well, be essential for this particular research study.

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