The Entering Of American Capital And The Problems Of Markets In Developing Countries

Utilizing foreign capital effectively is one of the important conditions for developing countries to achieve success in economic construction. One of the main methods to get foreign capital is opening market. American capital has what developing countries need, such as funds, technology, and management. The operation of American capital reflects the main characters of modern capital. Dealing with American capital correctly is useful in dealing with capital from other developed countries in a right way. This is also useful in taking advantage of foreign elements to develop national economy. Therefore, researching the relationship between the American capital and the markets in developing countries is necessary.For the capital owner, market means opportunity in which one can get interest through supplying the market with what is demanded. The commodity market for selling, direct investment market for productive input, and the capital market for raising and investing are decisive in deciding the scale of the whole market. Basically, the three kinds of markets reflect the main content of bilateral economic relation on markets. The markets mentioned above are affected by the environment.The market development in most of developing countries is limited by low-income status and poor agriculture. The effect of population on market is a complex one. Generally speaking, the opinion that large population means large market may not be right. The state of backward and imbalance in education have also hampered the market development. The shortage of effective political-legal system has negative influence on market operation. As far as external environment is concerned, the markets in developing countries show appendage to some degree, just as their economy. Comprehensively, the markets in most developing countries are complicated and unsteady. The development cost of those markets is high, though the market potentiality is very great.In opening the market in developing countries, American capital is concentrated mainly on three fields: (l)opening commodity market through bilateral trading, (2)exploiting direct investment market by direct investment, and(3)entering the capital market through financial business.The important opinions of main theories on international trade are reflected in trading between the United States and developing countries. This means the trading status between the United States and developing countries is inevitable. And it also means that developing countries are important markets for American capital. The international division of labor promoted by technology progress has made the population effect on demand decreased. Meanwhile the effect of technology condition, income status, and capital flow condition on demand has been increasing. There is no positive relation between the population and the market for American capital. This means that the major markets of American capital are mainly in developed countries though the markets in developing countries should not be neglected.Various investment theories show the necessity of foreign direct investment by American capital, including direct investment in developing countries by American capital. This also means that developing countries are important direct investment markets of American capital abroad. Different kinds of assessment methods show that for American capital, the environments of direct investment in most of developing countries are not as good as that in developed countries. Though developing countries are rich in labor, American capital is not good at labor-intensive investment and management relatively. In fact, most of American foreign direct investment is concentrated in developed countries with high salary, not in developing countries and areas with rich labor and low salary. Even American investors invested in developing countries and areas, the most part of the investment is concentrated in relatively developed countries and areas with relatively high salary.Capital market mainly comprises banking and security business. T...