Global Capital and High Value-Added Products: India and South Korea

Izmir International Conference on Technology and Social Sciences, İzmir, Turkey, 17 - 19 August 2022, pp.1-3

Publication Type: Conference Paper / Summary Text
City: İzmir
Country: Turkey
Page Numbers: pp.1-3
Dokuz Eylül University Affiliated: Yes

Abstract

Abstract

Informatics, knowledge-based development and development models have become privileged targets for national economies. It is essential for all nations to develop their economies using knowledge-based development models. NASDAQ (National Association of Securities Dealers Automated Quotations), an international finance company headquartered in the United States, experienced a six- to sevenfold increase in value in the early 2000s compared to the preceding decade. Globalization began to encompass all countries by the end of the 1990s, particularly with the advent of the Internet and other information technologies. Due to the influence of their diasporas, the stability of their states' sector policies, the low cost of their labor force, and their command of the English language, countries operating on the international stage, such as Israel, India, and Ireland, have begun to attract their countries rapidly [1].

Companies of all sizes, which are expanding rapidly in the information industry, have begun to direct the information industry as well as other industries. The market has become more competitive, the source of capital has emerged as a significant issue for businesses, and the form and direction of investment have begun to diversify. In addition, the rapidly growing number of entrepreneurs in the IT industry has made it difficult for companies to maintain their market share. At this time, the significance of alternative financing methods has grown [9,10]. Angel investing, a new type of investor, has grown in prominence during this time period [9,13]. Angel investors are individuals who invest their own money in a business, either individually or as part of a group [14]. For instance, beginning in the 2000s, Israeli technology companies began to attract substantial venture capital. Moreover, the activities of technology companies that are particularly successful in their home countries in the United States and the trading of their shares on the NASDAQ have created a positive momentum for these companies to receive even more investment and for the development of national technology companies [1].

Increasing international capital continued to invest not only in the United States, but also in numerous other regions of the globe. Countries desired to manage these capital and foreign currency inflows as a matter of course. Prior to 1984, the Indian government, for instance, aimed to gain the confidence of the hardware industry through its policies. Many multinational corporations, including Cisco, IBM, Microsoft, General Electric, and Fujitsu, have invested in India, particularly since the 1990s. In 2000, exports increased from 734 million dollars in 1996 to 4 billion dollars. By 2012, the Indian market for information technology had reached a size of $100 billion [3]. During the relevant period, 100 companies which is in the Fortune 500 list companies outsource to India [2]. With the influence of the diaspora, not only India but also Ireland attracted large investments from the United States in this sector. Israel's NASDAQ expansion strategies, strong funding support, and rapidly expanding software companies paved the way for multinational corporations to invest in their country.

The Foreign Exchange Regulation Act (FERA) implemented on 1973, which imposed a 40 percent cap on foreign ownership of Indian corporations. In the late 1970s, as a result, many foreign corporations left India. During the 1980s, however, there was a reversal in policy stance, resulting in a more open and constructive attitude towards liberalization of industrial and trade policies, foreign direct investment, and international cooperation [4]. FERA, or the Foreign Exchange Regulation Act, is a law that imposes stringent regulations on certain types of payments, foreign exchange, and securities, as well as transactions that have an indirect impact on foreign exchange exports and imports [5]. Particularly in the 2000s, small and medium-sized software companies protested against the Foreign Exchange Regulation Act-FERA, which was enacted to control a substantial amount of foreign currency coming from abroad[2].

There is also a gap in the literature regarding the concept of products with high added value. The relationship between innovation, value-added, and development, as well as the definition of the value-added product, are not adequately explained [6]. In addition, export and innovation-based export practices are essential for producing these goods and competing in the global market [7].

Turkey occasionally announces action plans in this direction. The Ministry of Industry and Technology's technology-oriented industry relocation program was published in the Official Gazette in 2019 and put into effect [8]. The Organization for Economic Development and Cooperation exports products on behalf of a country; based on the proportion of research and development expenditures in the total added value, inputs, and the technology level of intermediate products, it is categorized as high, medium-high, medium-low, and low technology [11], and exporting high-tech products is valued in terms of demonstrating a sustainable competitive performance on global markets [11,12].

Investments of international capitals in products with high added value, money flows, and their effects on national economies are systematically examined in this study. Their success in producing high value-added products for countries such as India and South Korea is considered worthy of research by researchers and companies operating in the sector.. At this point, all nations can develop national strategies for the high income that can be obtained from these products and formulate policies. The study evaluates the concept of high value-added products in all of its dimensions, as well as the concept of international capital and the structure of the NASDAQ. Examining the relevant literature reveals that the studies are primarily concerned with attracting international capital to countries and the strategies to be implemented at this stage. At this point in the study, with the evaluation of the subject within the context of potential risks and examples, recommendations are made for researchers, policymakers, and policymakers, and the subject is evaluated comprehensively.

Keywords— High value-added products, software industry, risk, investment, international capital, India, South Korea.

References

[1] Alican, F. (2011). Yol, İnsandan İnsanlığa Uzanan Bir Bilişim Öyküsü. Caretta: İstanbul.

[2] Alican, F. (2006). Ekonomik ve Sosyal Boyutlarıyla Dünyada ve Türkiye’de Yazılım Sektörü. İstanbul: İletişim Yayınları.

[3] Bhattacharjee, S., & Chakrabarti, D. (2015). Investigating India's competitive edge in the IT-ITeS sector. IIMB Management Review, 27(1), 19-34.

[4] CUTS, (2022).CUTS Centre forCompetition, Investment& Economic RegulationDiscussion Paper. 0332Investment Policy in India ñ Performance and Perceptions. Erişim Tarihi: 05/05/2022. https://cuts-ccier.org/wp-content/uploads/2019/01/Investment_Policy_in_India–Performance_and_Perceptions.pdf

[5] FERA, (2022). Foreign Exchange Management Act. Erişim Tarihi: 25/05/2022. https://en.wikipedia.org/wiki/Foreign_Exchange_Management_Act

[6] Güneş, S., Togay, A., & Güneş, Ç. (2015). Katma Değer ve Kalkınma Bağlamında Ürün Tasarımı. Sanat ve Tasarım Dergisi, (16), 97-112. https://doi.org/10.18603/std.76973

[7] Çetin, K., & Gedik, H. (2017). İnovasyon Ve İhracat Performansı İlişkisi: Karaman Örneği. Uluslararası İktisadi ve İdari İncelemeler Dergisi, 109-126. https://doi.org/10.18092/ulikidince.346605

[8] TCST, (2022).Türkiye Cumhuriyeti Sanayi ve Teknoloji Bakanlığı, Teknoloji Okdalı Sanayi Hamlesi Programı Uygulama Esasları Tebliği. Erişim Tarihi: 25/05/2022. https://www.resmigazete.gov.tr/eskiler/2019/09/20190918-7.htm

[9] Kurnaz, G., & Bedük, A. (2017). Türkiye’de ve Dünyada melek yatırımcılık. Selçuk Üniversitesi Sosyal Bilimler Meslek Yüksekokulu Dergisi, 20(1), 27-40.

[10] Günay, S. G., & Başalp, A. (2011). Girişimciler, melek yatırımcılar ve risk sermayesi firmaları arasında kurulacak bir ağ, bu ağın yapısı ve önemi. Business and Economics Research Journal, 2(2), 153-164.

[11] Güneş, S., & Tuğba, A. K. I. N. (2019). Yüksek teknolojili ürün i̇hracatı: Lider ülkeler ve Türkiye analizi. Sosyoekonomi, 27(40), 11-29.

[12] Kesbiç, C. Y., & Kirman, A. (2020). Katma Değerin Yüksek Teknoloji İhracatı Üzerindeki Etkisinin OECD Ülkeleri Açısından Analizi. Finans Politik & Ekonomik Yorumlar, 57(654), 99-117.

[13] Mitteness, C., Sudek, R., & Cardon, M. S. (2012). Angel investor characteristics that determine whether perceived passion leads to higher evaluations of funding potential. Journal of Business Venturing, 27(5), 592-606.

[14] Benjamin, G. A., & Margulis, J. B. (2000). Angel financing: How to find and invest in private equity. Canada: John Wiley & Sons.