(1)Financial crisis of 2007–2010

The financial crisis of 2007–2010 is considered by many economists to be the

worst financial crisis since the Great Depression of the 1930s. It was triggered by a
liquidity shortfall in the United States banking system, [ and has resulted in the
collapse of large financial institutions, the bailout of banks by national governments,
and downturns in stock markets around the world. In many areas, the housing
market has also suffered, resulting in numerous evictions, foreclosures and
prolonged vacancies. It contributed to the failure of key businesses, declines in
consumer wealth estimated in the trillions of U.S. dollars, substantial financial
commitments incurred by governments, and a significant decline in economic
activity.
Many causes for the financial crisis have been suggested, with varying weight
assigned by experts. Both market-based and regulatory solutions have been
implemented or are under consideration, while significant risks remain for the world
economy over the 2010–2011 period.

Overview:
The collapse of the U.S. housing bubble, which peaked in 2006, caused the values
of securities tied to U.S. real estate pricing to plummet thereafter, damaging financial
institutions globally

Background:
The immediate cause or trigger of the crisis was the bursting of the United States
housing bubble which peaked in approximately 2005–2006. Already-rising default
rates on "subprime" and adjustable rate mortgages (ARM) began to increase quickly
thereafter
Growth of the housing bubble
Between 1997 and 2006, the price of the typical American house increased by
124%. During the two decades ending in 2001, the national median home price
ranged from 2.9 to 3.1 times median household income

Financial markets impacts:

Impacts on financial institutions:

One of the first victims was Northern Rock, a medium-sized British bank. The highly
leveraged nature of its business led the bank to request security from the Bank of
England. This in turn led to investor panic and a bank run in mid-September 2007
Wealth effects:
There is a direct relationship between declines in wealth, and declines in
consumption and business investment, which along with government spending
represent the economic engine.

Effects on the global economy:

Global effects:
A number of commentators have suggested that if the liquidity crisis continues, there
could be an extended recession or worse. The continuing development of the crisis
has prompted in some quarters fears of a global economic collapse although there
are now many cautiously optimistic forecasters in addition to some prominent
sources who remain negative.

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Responses to financial crisis
Emergency and short-term responses:
The U.S. Federal Reserve and central banks around the world have taken steps to
expand money supplies to avoid the risk of a deflationary spiral, in which lower
wages and higher unemployment lead to a self-reinforcing decline in global
consumption.

Media on the crisis:

The financial crises have generated many articles and books outside of the scholarly
and financial press.
In May 2010 premiered Overdose: A Film about the Next Financial Crisis, a
documentary about how the financial crisis came about and how the solutions that
have been applied by many Governments are setting the stage for the next crisis.
The film is based on the book Financial Fiasco by Johan Norberg.

Second wave of the crisis?

The analysis of log-linear oscillations in the gold price dynamics for 2003–2010
conducted by Askar Akayev's research group in 2010 allowed them to forecast a
possible start of the second wave of the global crisis in April – June 2011.

(2)Foreign direct investment

Foreign direct investment (FDI) or foreign investment refers to long term

participation by country A into country B. It usually involves participation in
management, joint-venture, transfer of technology and expertise. There are two
types of FDI: inward foreign direct investment and outward foreign direct investment,
resulting in a net FDI inflow (positive or negative) and "stock of foreign direct
investment", which is the cumulative number for a given period. Direct investment
excludes investment through purchase of shares.

Types
A foreign direct investor may be classified in any sector of the economy and could be
any one of the following:[citation needed]
 an individual;
 a group of related individuals;
 an incorporated or unincorporated entity;
 a public company or private company;
 a group of related enterprises;
 a government body;
 an estate (law), trust or other societal organisation; or
 any combination of the above.

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Methods:
The foreign direct investor may acquire voting power of an enterprise in an economy
through any of the following methods:
 by incorporating a wholly owned subsidiary or company
 by acquiring shares in an associated enterprise
 through a merger or an acquisition of an unrelated enterprise
 participating in an equity joint venture with another investor or enterprise

Foreign direct investment in the United States:

The United States is the world’s largest recipient of FDI. More than $325.3 billion in
FDI flowed into the United States in 2008, which is a 37 percent increase from 2007.
The $2.1 trillion stock of FDI in the United States at the end of 2008 is the equivalent
of approximately 16 percent of U.S. gross domestic product (GDP).55

Foreign direct investment in China:

Starting from a baseline of less than $19 billion just 20 years ago, FDI in China has
grown to over $300 billion in the first 10 years. China has continued its massive
growth and is the leader among all developing nations in terms of FDI. [citation needed]
Even though there was a slight dip in FDI in 2009 as a result of the global slowdown,
2010 has again seen investments increase.

Foreign direct investment in India:

A recent UNCTAD survey projected India as the second most important FDI
destination (after China) for transnational corporations during 2010-2012. As per the
data, the sectors which attracted higher inflows were services, telecommunication,
construction activities and computer software and hardware.

Foreign direct investment and the developing world:

Foreign investment can be a significant driver of development in poor nations. It
provides an inflow of foreign capital and funds, in addition to an increase in the
transfer of skills, technology, and job opportunities. Many of the East Asian tigers
such as China, South Korea, Malaysia, and Singapore benefited from investment
abroad. The Commitment to Development Index ranks the "development-
friendliness" of rich country investment policies.