A key choice writers Essay

A key choice writers make is how they name or refer to characters in their stories. Write about the significance of the choices writers have made in naming or referring to their characters in the three texts you have studies. In the three texts I have studies the writers all name and refer to their characters in different ways. For example in The Road the characters are not given names and in Small Island all the characters are named and referred to in detail. Firstly mc McCarthy doesn’t give his characters names throughout his narrative he only refers to them as, the man, â€Å"papa† and the boy which shows they are father and son and that is all the detail McCarthy reveals. The significance of this is to create the effect that this dystopia they live in could happen to absolutely anyone. McCarthy has also done this to create a statement that names are no longer important since the world has ended and all civilisations have been wiped out. The only important this is surviving. McCarthy mentions the boy was born into the post apocalypse s so maybe the boy hasn’t even been given a name through the fact he doesn’t need one since there is no civilisation and there is a nil chance of survival, therefore there is no one to give your name to. McCarthy could also be revealing that maybe the parents didn’t think it was important in naming the boy because they wouldn’t survive. In Small Island Levy names her characters very stereotypically through their personalities. Queenies christened name is Victoria â€Å"I was christened victoria† like the late queen, but forever been called Queenie, which is what her mother wanted to christen her as but the vicar wouldn’t allow it as it was a common name so he suggested Victoria. Levy chose this name as it reflects Queenies character very well as she is very well mannered and â€Å"posh† like the queen. Gilberts name reveals that he is half white through the fact that Gilbert Joseph is a common white man name. Levy also reveals that his father is white by referring his to as â€Å"light skinned†. Hortense’s name reveals that she is not English however it also reveals that she is wealthy and higher class through the fact that Hortense is a French name which automatically stereotypically reveals Hortense’s character is going to be higher class which she is. Levy also refers to her characters in racist ways by addressing and describing the black characters as â€Å"darkies† and â€Å"niggers† the significance of this is to show when the novel was set â€Å"1948† when being racist was common and most English people were, in which Levy has took advantage of to make her narrative realistic. Finally in Rossetti’s poetry, Rossetti refers to men in different negative ways. For example in Goblin Market Rossetti refers men to a Goblins she has done this to reveal her emotions of men implying that they are all vial and evil. However, the word â€Å"Goblin† could also mean gold which could be implying that all men are rich which is true because in the 19th century it was only men who had money, so she could be implying that men are rare and rich. However, still men in Rossetti’s poems are shown to be negative which is interoperating that wealth isn’t all that good. Rossetti also gives her characters common names such as â€Å"Maude Clare†, â€Å"Laura† and â€Å"Lizzie† the significance of this is to make her poems still mysterious and open for interpretations which she does in all of her poems. Rossetti also refers to her characters through social class and skin tone she does this as it was a main importance in the 19th century. To compare all the writers I have studies both Levy and Rossetti refer and name their characters through social class in some way. However, McCarthy doesn’t mention social class or interpratate it in any way. He has done this because there is no longer any social class unlike in when Small Island and Rossetti’s when it was highly mentioned with the time they are set in. In conclusion in all the texts I have studied the writers all texts I have studied the writers all name their characters in different ways for different significance and to create different effects to their narratives. But also to affect the reader differently for example McCarthy doesn’t give names to his characters to give the narrative lack of information as it could be happen to anyone but also to give the reader no emotional connection to the novel.

Research science fiction Essay

During the summer I met up with Harinder to start building our website and to get an idea of what it would include and look like. We decided to use the program Dream Weaver since it was more flexible compared to word or Frontpage and it had many features that we could use for our website, such as different backgrounds and texts. Dream weaver enabled us to use Flash MX which has much more effective graphics which we couldn’t get on Front Page such as the flash buttons and 3-d backgrounds all to make our website suit the Sc-Fi theme. We targeted our audience immediately by choosing the theme Science Fiction which appeals to teen and young adult males. We kept the audience involved furthermore by the type of language we chose to use which wasn’t too complicated yet not too patronising. The set up of the page was kept colourful, yet formal, by not having the hyperlinks and pictures all over the page. It would therefore appeal to the younger and older generations of our audience. We also targeted the audience by adding more features to our website like voting and a guest book so they feel welcome and give feed back on what they thought of our website. The strengths and weaknesses of our production are fairly clear. Some of the strengths are that it appeals to a wide range of audiences which means that more people are attracted to our website and it would be popular. Another strength would be the different kinds of features that make up our website, from the different types of flash buttons to the backgrounds, wallpapers and pictures. The weaknesses of our website include the appearance of the homepage; it looks too cluttered at the top then too empty at the bottom. The colours don’t match especially with the different coloured buttons. Another weakness would be that on a page like the picture page all of the links are down on one side of the page and the rest of the page looks empty. We could have avoided this problem by putting more pictures and links on the page. One more weakness I could pick out would probably be that it takes quite a long time to load up the site. This could be put down to the fact that there is a lot of links and features on our webpage which slows down the connection and makes it harder for the computer to find the proxy settings. The responses from our target audience were good. We asked people between the ages of 15-30 years of age what they thought of our website. We got some good responses especially from the younger members of our audiences, such as the layout of the website and the features is good quality. They did offer some improvements, such as it needed more information put into the site. The point came up again that the home page was too cluttered and looked over crowded. The older generation of our audience also thought the site was very effective. Some proposed improvements were that we needed to take more care when writing the movie reviews since there was a lot of spelling mistakes. Also that some of the other pages seemed empty with only a few links on them. It was proposed we should have either not made a links page for the pictures page or made more links and pictures. Another improvement suggested that we should have made our website even more formal if we wanted to aim at a wider range of 25 year olds upward, by not having the colourful buttons or backgrounds but having them black and white. I feel I learnt that we needed to have deadlines between ourselves to get certain things finished and then move on to the next thing instead of going back and finishing off pictures or reviews. You need to have people in your group that you can rely on to have work finished and handed in. Appendix 1. Google – Search Engine 2. Science Fiction Websites- * Sci-fi.com * Sciencefic.com * Science Fiction Movie Reviews Pages * Science Fiction Picture Pages 3. Ask- Search Engine 4. Lycos- Search Engine

How does the director Steven Spielberg make ‘Jaws’ a tense and exiting film to watch? Essay

How does the director Steven Spielberg make ‘Jaws’ a tense and exiting film to watch? The film Jaws, directed by Steven Spielberg in 1975, featuring various techniques to create suspense,excitement and fear throughout the whole film. This is done using different types of camera shots and movement, music, and mis-en-scene.Its about when a gigantic great white shark begins to terrorise the residents in small island community of Amity, a police chief, a marine scientist and fisherman set out to stop it. One of the three significant scenes was, The death of Alex Kitner. the scene takes place on a crowded beach.High key lighting is used through out the scene. The camera uses a tracking shot of a young boy as he goes up to his mother and pleads her to let him have another 10 minutes in the sea. The camera then follows him as he goes to get his lilo and this can create suspense since the audience isn’t sure whether the boy will be the shark’s next victim. His swim shorts are red (red being the colour that attracts sharks as well as being symbolic for danger, fear, and blood). The audience is introduced to different possibilities of the shark’s next victim. This can create suspense since we don’t know who it will be. First, there is the man throwing sticks in the water for his dog to catch- both the man and his dog are possible victims since they are near the sea and it may be that the man has to go in the water himself just in case his dog needs helping. Ther e is also the large lady floating in the water. Brody spots a black shiny shape swimming towards the woman; and then we realise that it’s just the top of an old man’s swim hat as he swims through the water. The camera shot is level with the water and large lady, so it may make the audience feel that they’re in the sea too. A character in the film, named Brody, is also at the beach. He watches the different people and seems agitated as he is not sure if the shark will attack. As one of Brody’s friends are talking(close up on friends face, and wide shot on the side of his face) he sees a young woman screaming and splashing about in the water, paying no attention to his friend, he stands up, ready for action, and then realises it was her boyfriend lifting her up from the water. These two false alarms create anticipation for the audience since they expect the attack to happen and it doesn’t. A tracking shot is used as the boy rushes into the water with his yellow lilo, and the man calls for his dog. This implies that something  fearful is about to happen since his dog has gone missing. This creates suspense since the audience does not know why and how the dog is gone; and whether he’ll return or not. A low angle is used as the boy’s legs kick under the water,with something hurdling towards him.The Jaws theme music is used creating suspense and fear as it gets closer leading to the build up of Alex Kitners death.(Non digectic sound used) The attack is seen in the distance and the long shot indicates that the people on the beach are too far away to save the boy. A general panic occurs as people rush out of the water this scene becomes very fast paced. We do not see the shark. Causing a sudden sense of anticipation. During this, Brody realises what is happening and the camera quickly zooms in on his terrified face. The zooming-in camera shot signifies the attack as powerful and large, coming towards him; which reflects back on what the actual shark itself is like. While parents are rush towards the water to get their children Brody still does not enter the water all he does it tell everyone to get out. After the attack is over, a yellow lilo washes up on the shore, soaked with blood. A high angle is used, the colour yellow is used as the symbolic colour for danger and warning throughout the scene. The man who owns the dog is wearing yellow shorts, and his dog has been attacked by the shark. The boy was floating on a yellow lilo, and he became the shark’s second victim.Usually the colour for danger (red or black) and yellow is normally the colour for happiness and sunshine. So already the audience can sense a tone of difference portrayed in this film. Another scene is Hooper and the boat. It takes place in the Amity sea. Low key lighting is used and it is very misty.This is to cause tension and fear as people most vulnerable when it is dark. When Hooper finds Ben Gardeners boat there is no body there, this cause a sense of mystery. So he goes in the water to find him. Hooper then finds a sharks tooth there is a close up on the tooth. So the audience can try and picture how big the shark is .On his way down calm creepy music is played, Steven does this to trick the viewer into thinking nothing will be happen but then Hooper sees a hole and out comes the remains of Ben the camera zooming to Ben’s face to create more fear. Hooper screams in shock.The music becomes much more high pitched. Hooper then gets away in fear of what will happen if he stay in there any  longer. The third and final scene is the climax. This scene takes place in Amity sea, and has a mixture of both high and low key lighting.The boat is sinking this is shown with a long shot. Brody is stuck inside with the shark on its way. As he tries to find an exit the shark breaks through the window and attacks, with is mouth wide open(close up) and then after an extreme close up of its teeth. This done to scare the audience and is very effective. Brody then puts a gas canister in the sharks mouth with then causes it to retreat but no for long. Spielberg does this to give the audience a sense of relief so when the shark attacked again it will be more shocking.The bells ring to show the boat is sinking.(digetic sound).High pitched music begins. Brody climbs up the pole armed. The shark attacks again. He stabs it with a shark pole.(low angle). There is now a close up of the shark trying to bite Brody (high angle) and a long shot of him trying kill it. The shark eats the pole a goes back into the sea. Brody now prepares to kill the shark by shooting at the gas canister in the sharks mouth.The scene is becomes faced paced as the shark heads toward the boat,waiting for the last second Brody finally shoots at the canister creating a mass explosion(wide shot) of the shark pieces. The is done to cause suspense and excitement for the audience, as waiting till the last second to destroy the shark is more fearful and interesting. These were not the only scenes that were tense and exiting, there was the death of Quint. Both high key lighting and low were used. Since Brody went to the back of the boat when the shark attacked he was not killed.Then the shark came from the water (low key lighting) and opened mouth, close up on mouth, to eat them the boat tilted so that Quint would be falling into its mouth. This was done to show that Quint was powerless to make it more cruel and horrifying death. As quint was sliding it became more fast paced and there were cuts between the shark and Quint this was to build suspense. When Quint was bit, the sound of his bones cracking was to add more effect to make this more realistic and ruthless, him shouting(digetic sound also added effect). As the shark swayed him side to side it became more dreadful to watch but this is what made the scene interesting. When he was dead and the shark pulled him down this built the suspense and what made the scene so captivating. I think Jaws was ground breaking and intense it was made in the 19s and is still so popular. The shark theme music was great it had a good plot and there was a good connection between characters. Some of the shots were great. e.g. the zoom shot. I think people might not like Jaws because of its effects as the 21st century prefers what they watch to be HD and the action scene to look extremely realistic (shark to not look fake), also Jaws was the type of movie which did not let see the shark at the beginning to build the suspense but some people don’t like that other classify Jaws a more of a thriller than a horror. Jaws is still poplar today for many reasons- it theme became popular as you could not forget it, the suspense of not knowing how the shark looked and the fact that everyone thought it was destined to fail as when they started making the movie they had not script, no cast and no shark until Steven came†¦

Personal Development for Work Essay Example | Topics and Well Written Essays - 2500 words

Personal Development for Work - Essay Example Moreover, I have also been able to show some purchasers a three-bedroom flat which was selling for  £295,000 in a block behind the real estate agency. Through this experience, I have also realized the importance of persuasion and influencing in being a convincing salesman. No amount of technical skills can match good interpersonal skills and effective rapport building. There has been another opportunity for me to interact with potential buyers, and this was when I oriented them with Great Portland Street in Fitzrovia to show them a top-floor flat which enjoys outstanding views. During the course of the practicum, I was also given the chance to suggest ideas on developing a site for the agency. Overall, there was not much difficulty with this learning experience. This was facilitated by the fact that everyone was friendly and the atmosphere was conducive to practical learning. I have also seen from their example how valuable teamwork was as well as relationship marketing. It is very important that my each member of my team knows what I expect from him or her in terms of goals. Goals or objectives are statements of intent to achieve specific business results. They are measurable, controllable and are directly related to such results. In setting goals or objectives, they should be specific and significant, measurable, achievable, results-oriented, time-bound, engaging, and reviewed (Miser, 2006, online). Apart from this, my team should be given constant feedback to know how well they are doing their tasks. Feedback giving also increases the effectiveness of goal setting, feedback should be provided to the employee on his progress in reaching his goal (Hartog et al, 1999). Feedback can include verbally telling an employee how he is doing, placing a chart on a wall, or displaying a certain color of light when the employee’s work pace will result in goal attainment and a

How To Motivate Your Employee Essay Example | Topics and Well Written Essays - 1500 words

How To Motivate Your Employee - Essay Example Since employees do not always hold these beliefs to be true, attempts to improve motivation by using incentives cannot make the grade, even when the incentives are highly desirable ones. At an organization a major transformation attempt only makes difficult the situation. If any of three beliefs are shaky to begin with, organizational change at a company can weaken them even further. The result is often serious motivation and performance problems, at a time when organizations can least afford them, and a resultant surge in the negative emotions associated with change. When an employee believes 'one cannot do it' for example, one may develop a lack of self-confidence and begin to experience many of the unpleasant feelings that go along with it: self-doubt, anxiety, and frustration. About a year into the change effort, one manager portrayed the inner turmoil one went through by comparing the restructuring to building a ship at the same time one is trying to sail it. (Mele, pp 71-72) Worker beliefs that 'outcomes are not tied to one's performance' can also escort to noteworthy motivation problems, especially lack of trust. This is normally accompanied by feelings of skepticism or disbelief; precisely the emotions that another manager felt when one was told early on change effort that power would be allocated differently. Employee beliefs that 'outcomes will not be satisfying to one' often escort to a third major problem, chronic dissatisfaction, and to feelings of anger, rebelliousness, low morale and absenteeism. (Miner, pp 44-45) Like as the negative emotions allied with change can often go undetected, the motivation and performance problems that cause them frequently remain hidden and unresolved. Due to this, managers who lead change are sometimes frustrated in their efforts. They fail to realize that it is not enough to appeal to the intellect of their workers. So managers must also win employees' hearts in order to implement change successfully. The reason behind why are motivation problems so difficult to uncover is that employees are afraid

Kants theory of perpetual peace and Arab-Israeli politics Essay

Kants theory of perpetual peace and Arab-Israeli politics - Essay Example This paper aims to read Kant’s theory of â€Å"Perpetual Peace† as a practical base to understand and name some ongoing events in Arab-Israeli politics.The academia has been discussing the nature of Arab-Israeli politics throughout the last few decades. Considering the widely shared terminology, one may easily become conscious of some chronic words: change, turbulence, chaos, new world order, governance, civil society, transition, revolution, and peace. It is almost an accepted theory, or in another word, hypothesis, that we are facing a complete change. From this standpoint, this paper aims to read Kant’s theory of â€Å"Perpetual Peace† as a practical base to understand and name some ongoing events in Arab-Israeli politics. One can find many an area of agreement or disagreement over the logic and formulas chosen by policy-makers or academics in â€Å"what we are fighting for.† For over two hundred years , academics and politicians have articulated at the power of democracy to make global harmony. The Oslo Agreement signed between Israel and the Palestinians in 1993 was ended with a view to develop â€Å"a just, lasting and comprehensive peace†. Yet, since their coming into effect the Arabs have seen not peace but disgust of the most evil kind in modern history. For several years, the de facto rule of Western administrations and newspapers in evaluating the Middle Eastern political state of affairs was similar to the scene in The Wizard of Oz: â€Å"Pay no attention to the man behind the curtain† ... One must retain information that the Arabs control 99.9 per cent of the Middle East territories. Israel stands for only 1 per cent of the territories. The State of Israel was established primarily to be a homeland to the Jewish community. The civil rights of the Jewish people to return to their primeval home town has been recognized by the international community. Creating a 'perpetual peace' is a long-term process, one that should have run equivalent to the Oslo negotiations but was unnoticed in the belief that everything could be changed by tomorrow. If it isn't done at the moment, when the situation of political affairs of Arab States is about as bad as it has been since the ending of the 1967 war, mass support for a 'peace conformity', if and when such an contract is at last signed, will not be approaching, and the forces of irredentism and conflict will again win the day. The conflicts between the Arab and Muslim world on one side, and Israel on another, is top news around the entire world. It is also at the forefront of debate on many institutions of higher education around the world. As Jos Saramago, winner of the 1998 Nobel Prize in Literature, quoted: "We must ring all bells in the world to tell that what is happening in Palestine is a crime, and it is within our power stop to this... We can compare it to what happened in Auschwitz" (Alan Dershowitz 2007). Nicholas De Genova, a Columbia University assistant professor of anthropology, has reported: "The heritage of the victims of the Holocaust belongs to the Palestinian people. The state of Israel has no legitimate claim to the heritage of the Holocaust. The heritage

E-business( i will upload the topic for the writer) Essay

E-business( i will upload the topic for the writer) - Essay Example The cloth line, sales people have the option of searching for the customer physical premises and deliver the product. In offline selling, the sales person physically identifies the need. For example, the clothe seller may notice that there many new born in the region therefore, decide to major on the present opportunity otherwise one may be wasting time trying to sell school uniforms. On this stage, the seller focuses on the customer needs, evaluates the suitable cloth to fit in well, and then prioritizes the customers (Goldman Sachs Group, 2012:24). It is advisable for the seller to let go off those not likely to buy to save time and other involving resources. The next step is the physical contact with the buyer. The seller uses communication skills to create interest from the first conversation. In this stage, the seller uses humor to make the process interesting and grab customer attention. The seller states the purpose of his visit clearly and time factor is put into consideratio n not to waste customers’ time (Reynar, Phillips, & Heumann, 2010:418). When presenting, the seller focuses on the benefit and qualities of the cloth. Allow the customer to ask many questions and wear a smile on your face. At this stage, he seller may face objections from the customer therefore, one should be able to handle customers’ worries and provide alternatives. ... For Pike to contact a successful online business, it understands the business obligation since its sales force will be performing transactions online. It is very keen not to incur looses from fraud or even viruses. Online business requires Pike to poses clear information and guidelines on order placement, delivery, warranties, refunds, and security. Privacy is also of high importance. The technological change is affecting and influencing the mode of selling and purchasing of goods and services because customers can access products and services in the internet. Even though the customer and the seller are not in the same place, they are able to conduct a business transaction (Marilyn & Judy, 2010:217). Pike has a website where it displays information about the available clothes, size, quality, theme, fabric characteristics, colors, and even price. The online seller has to prospect customers and send them to the website. Pike has to identify with the customer need and therefore, step in to satisfy it. Pike strategizes and outdoes competition since so many products are available online. Once a prospecting customer opens the website, Pike is able to establish a rapport. The rapport may emerge from the speed of downloading items and information, its aesthetics and navigation. Every activity a customer performs on the website is an opportunity to establish rapport. To establish on this, the site is friendly to the customer from the first instance. For example, the customer is able to find all the information required about a dress, the site downloads images first and provide an interactive platform where customers can post questions and recommendations. The site is

Incorporation is Effective and Allows the Business to Raise Revenue Essay

Incorporation is Effective and Allows the Business to Raise Revenue - Essay Example A LLC protects a person from getting their personal assets taken away, his assets of the company will be in danger. The court will first investigate the matter, and then the matter of meditations and negotiations takes place. The court may close the LLC for a fee and analyze the allocation of assets that the plaintiff deserves. aâ‚ ¬? Susan, Dave, and Marvin are society hair stylists, who make a very good living. Because they are all in so much demand, they decide to open a business together. They form a Limited Liability Company, through which they operate a hair salon called Fabulous Hair, LLC. Each contributes $10,000 to the business. One day Marvin calls in sick, and Susan and Dave work double duty trying to keep up with Marvinaâ‚ ¬Ã¢â€ž ¢s appointments and their own appointments. Dave forgets about one of Marvinaâ‚ ¬Ã¢â€ž ¢s clients and leaves chemicals on her hair too long, which causes serious chemical burns. The client sues for damages and recovers a judgment in the amount of $75,000 against Fabulous. Discuss the extent to which each member of the LLC may be held responsible for the clientaâ‚ ¬Ã¢â€ž ¢s damages. Support your conclusions with facts and information from the text. Be sure to cite to your sources. Since the company is LLC, everyone is accounted for the share that they put up in the corporation. Susan, and Marvin will have liability of $10000, but since Dave left the chemicals, he will personally liable more than his partners since it was his fault. Susan and Marvin are not responsible for Dave’s work and hence should file a motion to dismiss the notion. A LLC protects the assets of another employees even if the another employee does... The paper shows that since the company is LLC, everyone is accounted for the share that they put up in the corporation. Susan and Marvin will have the liability of $10000, but since Dave left the chemicals, he will personally liable more than his partners since it was his fault. Susan and Marvin are not responsible for Dave’s work and hence should file a motion to dismiss the notion. An LLC protects the assets of another employee even if the another employee does something wrong. In essence, Susan and Marvin's won't have to worry about their personal assets. Paul and Rachel Anderson love to eat at Burgerville, a nationwide chain of fast-food restaurants. They love it so much that they purchase a Burgerville franchise from Burgerville, Inc., and are successful right away. One day, supermodel Olga X enters the restaurant with her children. Olga slips on Super Secret Sauce, a Burgerville treats that someone spilled on the floor. Olga slides across the floor and hits her face on the jukebox, which causes permanent injury to her famous face. Her attorney filed suit against Paul, Rachel, and Burgerville, Inc. List the rights and obligations arising from the business relationship between the Andersons and Burgerville, Inc. Will Olga recover a judgment against all the parties she has sued? Explain the legal and factual reasons for your answer. Paul and Rachel since are the owners, will have to pay for certain injuries, but they will be limited. Buying a franchise, in essence, means to buy a security.

Eyjafjallajkull - Volcanic Eruption Research Paper

Eyjafjallajkull - Volcanic Eruption - Research Paper Example The area near the volcanic mountain rose by about two inches which signified that there was considerable lava flow underneath that area. All previous eruptions of this volcanic mountain had caused floods as the glacial ice melted as a result of volcanic eruption but the current eruption has taken place in an area that is covered by ice during winter only. So, the danger from flooding could be averted. Also all previous eruptions from Eyjafjallajokull were accompanied by simultaneous eruptions from the neighboring Katla volcano. Thankfully, however, this time no volcanic activity was observed in Katla. (Simmon, 2010). Strange as it may sound, volcanic eruptions in Iceland have been constantly adding to its landmass. There is a definite reason as to why Iceland is peppered with volcanoes. It is situated in an area where two geological conditions that lead to the formation of a volcano are very much present. The first is the presence of a fissure in the earth’s crust and the seco nd is continuous upward movement of molten rock, magma through that crack (Young, 2010). Iceland also has numerous geysers and hot springs which are sure indications of heightened geothermal activity in that zone.

Project on Budgetary Control Essay Example for Free

Project on Budgetary Control Essay 1. A budget is concerned for a definite future period. 2. A budget is a written document. 3. A budget is a detailed plan of all the economic activities of a business. 4. All the departments of a business unit co-operate for the preparation of a business budget. 5. Budget is a mean to achieve business and it is not an end in itself. 6. Budget needs to be updated, corrected and controlled every time when circumstances changes. Therefore it is a continuous process. 7. Budget helps in planning, coordination and control. 8. Different types of budgets are prepared by industries according to business requirements. 9. A budget acts a business barometer. 10. Budget is usually prepared in the light of Past Experience. 11. Budget is a constant endeavor of the Management. 2 PREPARATION OF BUDGETS 1. Definition of objectives: A budget being a plan for the achievement of certain operational objectives, it is desirable that the same are defined precisely. The objectives should be written out; the areas of control demarcated; and items of revenue and expenditure to be covered by the budget stated. This will give a clear understanding of the plan and its scope to all those who must cooperate to make it a success. 2. Location of the key (or budget) factor: There is usually one factor (sometimes there may be more than one) which sets a limit to the total activity. For instance, in India today sometimes non-availability of power does not allow production to increase inspite of heavy demand. Similarly, lack of demand may limit production. Such a factor is known as key factor. For proper budgeting, it must be located and estimated properly. 3. Appointment of controller: Formulation of a budget usually requires whole time services of a senior executive; he must be assisted in this work by a Budget Committee, consisting of all the heads of department along with the Managing Director as the Chairman. The Controller is responsible for co-ordinating and development of budget programmes and preparing the manual of instruction, known as Budget manual. The Budget manual is a schedule, document or booklet which shows, in written forms the budgeting organisation and procedures. The manual should be well written and indexed so that a copy thereof may be given to each departmental head for guidance. 3 4. Budget period: The period covered by a budget is known as budget period. There is no general rule governing the selection of the budget period. In practice the Budget Committee determines the length of the budget period suitable for the business. Normally, a calendar year or a period coterminous with the financial year is adopted. The budget period is then sub-divided into shorter periods—it may be months or quarters or such periods as coincide with period of trading activity. 5. Standard of activity or output: For preparing budgets for the future, past statistics cannot be completely relied upon, for the past usually represents a combination of good and bad factors. Therefore, though results of the past should be studied but these should only be applied when there is a likelihood of similar conditions repeating in the future. Also, while setting the targets for the future, it must be remembered that in a progressive business, the achievement of a year must exceed those of earlier years. Therefore what was good in the past is only fair for the current year. In budgeting, fixing the budget of sales and of capital expenditure are most important since these budgets determine the extent of development activity. For budgeting sales, one must consider the trend of economic activity of the country, reactions of salesmen, customers and employees, effect of price changes on sales, the provision for advertisement campaign plan capacity etc. 4 Meaning of Budgetary Control: The Chartered Institute of Management Accountants of England and Wales has defined the terms ‘budgetary control’ as â€Å"Budgetary control is the establishment of budgets relating to the responsibilities of executives of a policy and the continuous comparison of the actual with the budgeted results, either to secure by individual action the objective of the policy or to provide a basis for its revision.† It is the system of management control and accounting in which all the operations are forecasted and planned in advance to the extent possible and the actual results compared with the forecasted and planned ones. Budgetary Control Involves: 1. Establishment of budgets 2. Continuous comparison of actuals with budgets for achievement of targets 3. Revision of budgets after considering changed circumstances 4. Placing the responsibility for failure to achieve the budget targets. The salient features of Budgetary Control System are as follows: 1. Determining the objectives to be achieved, over the budget period, and the policy or policies that might be adopted for the achievement of these ends. 2. Determining the variety of activities that should be undertaken for the achievement of the objectives. 3. Drawing up a plan or a scheme of operation in respect of each class of activity, in physical as well as monetary terms for the full budget period and its parts. 5 4. Laying out a system of comparison of actual performance by each person, section or department with the relevant budget and determination of causes for the discrepancies, if any. 5. Ensuring that corrective action will be taken where the plan is not being achieved and, if that be not possible, for the revision of the plan. In brief, it is a system to assist management in the allocation of responsibility and authority, to provide it with aid for making, estimating and planning for the future and to facilitate the analysis of the variation between estimated and actual performance. In order that budgetary control may function effectively, it is necessary that the concern should develop proper basis of measurement or standards with which to evaluate the efficiency of operations, i.e., it should have in operation a system of standard costing. Besides this, the organization of the concern should be so integrated that all lines of authority and responsibility are laid, allocated and defin ed. This is essential since the system of budgetary control postulates separation of functions and division of responsibilities and thus requires that the organization shall be planned in such a manner that everyone, from the Managing Director down to the Shop Foreman, will have his duties properly defined. Objectives of Budgetary Control System: 1. Portraying with precision the overall aims of the business and determining targets of performance for each section or department of the business. 2. Laying down the responsibilities of each of the executives and other personnel so that everyone knows what is expected of him and how he will be judged. Budgetary control is 6 one of the few ways in which an objective assessment of executives or department is possible. 3. Providing a basis for the comparison of actual performance with the predetermined targets and investigation of deviation, if any, of actual performance and expenses from the budgeted figures. This naturally helps in adopting corrective measures. 4. Ensuring the best use of all available resources to maximize profit or production, subject to the limiting factors. Since budgets cannot be properly drawn up without considering all aspects usually there is good co-ordination when a system of budgetary control operates. 5. Co-coordinating the various activities of the business, and centralizing control and yet enabling management to decentralize responsibility and delegate authority in the overall interest of the business. 6. Engendering a spirit of careful forethought, assessment of what is possible and an attempt at it. It leads to dynamism without recklessness. Of course, much depends on the objectives of the firm and the vigour of its management. 7. Providing a basis for revision of current and future policies. 8. Drawing up long range plans with a fair measure of accuracy. 9. Providing a yardstick against which actual results can be compared. Working of a budgetary control system: The responsibility for successfully introducing and implementing a Budgetary Control System rests with the Budget Committee acting through the Budget Officer. The Budget Committee would be composed of all functional heads and a member from the Board to 7 preside over and guide the deliberations. The main responsibilities of the Budget Officer are: 1. To assist in the preparation of the various budgets by coordinating the work of the accounts department which is normally responsible to compile the budgets—with the relevant functional departments like Sales, Production, Plant maintenance etc.; 2. To forward the budget to the individuals who are responsible to adhere to them, and to guide them in overcoming any practical difficulties in its working; 3. To prepare the periodical budget reports for circulation to the individuals concerned; 4. To follow-up action to be taken on the budget reports; 5. To prepare an overall budget working report for discussion at the Budget Committee meetings and to ensure follow-up on the lines of action suggested by the Committee; 6. To prepare periodical reports for the Board meeting. Comparing the budgeted Profit and Loss Account and the Balance Sheet with the actual results attained. It is necessary that every budget should be thoroughly discussed with the functional head before it is finalized. It is the duty of the Budget Officer to see that the periodical budget reports are supplied to the recipients at frequent intervals as far as possible. The efficiency of the Budget Officer, and through him of the Budget Committee, will be judged more by the smooth working of the system and the agreement between the actual figures and the budgeted figures. Budgets are primarily an incentive and a challenge for better performance; it is up to the 8 Budget Officer to see that attention of the different functional heads is drawn to it to face the challenge in a successful manner. Advantages of Budgetary Control System: 1. The use of budgetary control system enables the management of a business concern to conduct its business activities in the efficient manner. 2. It is a powerful instrument used by business houses for the control of their expenditure. It in fact provides a yardstick for measuring and evaluating the performance of individuals and their departments. 3. It reveals the deviations to management, from the budgeted figures after making a comparison with actual figures. 4. Effective utilization of various resources like—men, material, machinery and money is made possible, as the production is planned after taking them into account. 5. It helps in the review of current trends and framing of future policies. 6. It creates suitable conditions for the implementation of standard costing system in a business organization. 7. It inculcates the feeling of cost consciousness among workers. 8. It helps the principal of management by exception to apply. 9. Management which has developed a well ordered budget plans and which operate accordingly, receive greater favour from credit agencies. 9 Limitations of Budgetary Control System: 1. Based on Estimates: Budgets may or may not be true, as they are based on estimates. 2. Time factor: Budgets cannot be executed automatically. Accuracy in budgeting comes through experience. Management must not expect too much during the development period. 3. Cooperation Required: Staff co-operation is usually not available during budgetary control exercise. The success of the budgetary control depends upon willing co-operation and teamwork, 4. Expensive: Its implementation is quite expensive. No budgetary programme can be successful unless adequate arrangements are made for supervision and administration. 5. Not a substitute for management: Budget is only a managerial tool. It cannot substitute management. 6. Rigid document: Budgets are considered as rigid document. But in reality, firm’s affairs continuously change under inflationary pressure and changing government policies. 10 ZERO BASE BUDGETS The technique of zero base budgeting suggests that an organisation should not only make decisions about the proposed new programmes, but should also review the appropriateness of the existing programmes from time to time. Such a review should particularly be done of such responsibility centres where there is relatively high proportion of discretionary costs. Costs of this type depend on the discretion or policies of the responsibility centre or top managers. These costs have no direct relation to volume of activity. Hence, management discretion typically determines the amount budgeted. Some examples are: expenditure on research and development, personnel administration, legal advisory services. Zero base budgeting, as the term suggests, examines or reviews a programme or function or responsibility from ‘scratch’. The reviewer proceeds on the assumption that nothing is to be allowed. The manager proposing the activity has, therefore, to justify that the activity is essential and the various amounts asked for are reasonable taking into account the outputs or results or volume of activity envisaged. No activity or expense is allowed simply because it was being allowed or done in the past. Thus according to this technique each programme, whether new or existing, must be justified in its entirety each time a new budget is formulated. It involves: 1. Dealing with particularly all elements of mangers budget requests 2. Critical examination of ongoing activities along with the newly proposed activities 3. Providing each manger a range of choice in setting priorities in respect of different activities and in allocating resources. 11 Process of Zero Base Budgeting: The following steps are involved in Zero base budgeting: Determining the objectives of budgeting: The objective may be to effect cost reduction in staff overheads or it may be to drop, after careful analysis, projects which do not fit into achievement of the organizations objectives etc. Deciding on scope of application: The extent to which zero base budgeting is to be introduced has to be decided, i.e. whether it will be introduced in all areas of the organisations activities or only in a few selected areas on trial basis. Developing decision units Decision units for which cost-benefit analysis is proposed have to be developed so as to arrive at decisions whether they should be allowed to continue or to be dropped. Each decision unit, as far as possible should be independent of other units so that it can be dropped if the cost analysis proves to be unfavourable for it. Developing decision packages : A decision package for each unit should be developed . While developing a decision package, answers to the following questions would be desirable: †¢ Is it necessary to perform a particular activity at all? If the answer is in the negative, there is no need to proceed further. †¢ How much has been the actual cost of the activity and what has been the actual benefit both in tangible as well as intangible forms? †¢ What should be the estimated cost of the level of activity and the estimated benefit from 12 such activity? †¢ Should the activity be performed in the way in which it is being performed, and what should be the cost? †¢ If the project or activity is dropped, can the unit be replaced by an outside agency? After completing decision packages for each unit, the units are ranked according to the findings of cost benefit analysis. Essential projects are identified and given the highest ranks. The last stage is that of implementing the decision taken in the light of the study made. It involves the selection and acceptance of those projects which have a positive cost-benefit analysis or which are capable of meeting the objectives of the organization. The above analysis shows that zero base budgeting is in a way an extension of the method of cost benefit analysis to the area of the corporate budgeting. Advantages of Zero Base Budgeting: †¢ It provides the organization with systematic way to evaluate different operations and programmes undertaken. It enables management t o allocate resources according to priority of the programmes. †¢ It ensures that each and every programme undertaken by managers is really essential for the organization, and is being performed in the best possible way. †¢ It enables the management to approve departmental budgets on the basis of cost-benefit analysis. No arbitrary cuts or increase in budget estimates are made. †¢ It links budgets with the corporate objectives. Nothing will be allowed simply because it was being done in the past. An activity may be shelved if it does not help in achieving the goals of the enterprises. 13 †¢ It helps in identifying areas of wasteful expenditure and, if desired, it can also be used for suggesting alternative courses of action. †¢ It facilitates the introduction and implementation of the system of `management by objectives. Thus it can be used not only for fulfillment of the objectives of traditional budgeting, but also for a variety of other purposes. It is contended that zero base budgeting is time consuming. Of course, it is true, but it happens only in the initial stages when decision units have to be identified and decision packages have to be developed or completed. Once this is done, and the methodology is clear, zero base budgeting is likely to take less time than the traditional budgeting. In any case, till such time the organization is properly acclimatized to the technique of zero base budgeting, it may be done in a way that all responsibility centre’s are covered at least once in three or four years. Zero base budgeting as a concept has become quite popular these days. The technique was first used by the U.S. Department of Agriculture in 1962. Texas Instruments, a multinational company, pioneered its use in the private sector. Today, a number of major companies such as Zerox, BASF, International Harvester and Easter Airlines in the United State are using the system. Some departments of the Government of India have recently introduced zero base budgeting with a view to making the system of budgetary control more effective. 14 PERFORMANCE BUDGETS Performance budgeting (or programme budgeting) has been designed to correct the shortcomings of traditional budgeting by emphasizing managements considerations/ approaches. Both the financial and physical aspects are incorporated into the budget. A performance budget presents the operations of an organisation in terms of functions, programmes, activities, and projects. In performance budgeting, precise detainment of job to be performed or services to be rendered is done. Secondly, the budget is prepared in terms of functional categories and their sub-division into programmes, activities, and projects. Thirdly, the budget becomes a comprehensive document. Since the financial and physical results are interwoven, it facilitates management control. The Main objectives of Performance Budgeting are: (i) to coordinate the physical and financial aspects; (ii) to improve the budget formulation, review and decision-making at all levels of management (iii) to facilitate bett er appreciation and review by controlling authorities (legislature, Board of Trustees or Governors, etc) as the presentation is more purposeful and intelligible; (iv) to make more effective performance audit possible; and (v) to measure progress towards long-term objectives which are envisaged in a development plan. Performance budgeting involves evaluation of the performance of the organisation in the context of both specific, as well as, overall objectives of the organisation. It presupposes a crystal clear perception of organisational objectives in general, and short-term business objectives as stipulated in the budget, in particular by each employee of the organisation, irrespective of his level. It thus, provides a definite direction to each employee and also a control mechanism to higher management. 15 Performance budgeting requires preparation of periodic performance reports. Such reports compare budget and actual data, and show variances. Their preparation is greatly facilitated if the authority and responsibility for the incurrence of each cost element is clearly defined within the firms organisational structure. In addition, the accounting system should be sufficiently detailed and coordinated to provide necessary data for reports designed for the particular use of the individuals or cost centres having primary responsibility for specific cost. The responsibility for preparing the performance budget of each department lies on the respective Department Head. Each Department Head will be supplied with a copy of the section of the master budget appropriate to his sphere. For example, the chief buyer will be supplied with the copy of the materials purchase budget so that he may arrange for purchase of necessary materials. Periodic reports from various sections of a department will be received by the departmental head that will submit a summary report about his department to the budget committee. The report may be daily, weekly or monthly, depending upon the size of business and the budget period. These reports will be in the form of comparison of budgeted and actual figures, both periodic and cumulative. The purpose of preparing these reports is to promptly inform about the deviations in actual and budgeted activity to the person who has the necessary authority and responsibility to take necessary action to correct the deviations from the budget. 16 FUNCTIONAL BUDGET A functional budget is one which is related to function of the business as for example, production budget relating to the manufacturing function. Functional budgets are prepared for each function and they are subsidiary to the master budget of the business. The various types of functional budgets to be prepared will vary according to the size and nature of the business. The various commonly used functional budgets are: †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ †¢ Sales budget Production budget Plant utilisation budget Direct-material usage budget Direct-material purchase budget Direct-labour (personnel) budget Factory overhead budget Production cost budget Ending-inventory budget Cost-of-goods-sold budget Selling and distribution cost budget Administration expenses budget Research and development cost budget (xiv) Capital expenditure budget Cash budget 17 Illustration: Sales Budget: Sales forecast is the commencement of budgeting and hence sales budget assumes primary importance. The quantity which can be sold may be the principal budget factor in many business undertakings. In any case in order to chalk out a realistic budget programme, there must be an accurate sales forecast. The sales budget indicates for each product: 1. The quantity of estimated sales and 2. The expected unit selling price. These data are often reported by regions or by sales representatives. In estimating the quantity of sales for each product, past sales volumes are often used as a starting point. These amounts are revised for factors that are expected to affect future sales, such as the factors listed below. 1. Backlog of unfilled sales orders 2. Planned advertising and promotion 3. Expected industry and general economic conditions 4. Productive capacity 5. Projected pricing 6. Findings of market research studies 7. Relative product profitability. 8. Competition. 18 Once an estimate of the sales volume is obtained, the expected sales revenue can be determined by multiplying the volume by the expected unit sales price, the sales budget represents the total sales in physical quantities and values for a future budget period. Sales managers are constantly faced with problem like anticipation of customer requirements, new product needs, competitor strategies and various changes in distribution methods or promotional techniques. The purposes of sales budget is not to attempt to estimate or guess what the actual sales will be, but rather to develop a plan with clearly defined objectives towards which the operational effort is directed in order to attain or exceed the objective. Hence, sales budget is not merely a sales forecast. A budget is a planning and control document which shows what the management intends to accomplish. Thus, the sales budget is active rather than passive. A sales forecast, however, is a projection or estimate of the available customer demand. A forecast reflects the environmental or competitive situation facing the company whereas the sales budget shows how the management intends to react to this environmental and competitive situation. A good budget hinges on aggressive management control rather than on passive acceptance of what the market appears to offer. If the company fails to make this distinction, the budget will remain more a figure-work exercise than a working tool of dynamic management cont rol. 19 The sales budget may be prepared under the following classification or combination of classifications: 1. Products or groups of products. 2. Areas, towns, salesmen and agents. 3. Types of customers as for example: (i) Government, (ii) Export, (iii) Home sales, (iv) Retail depots. 4. Period—months, weeks, etc Example of Sales Budget: XYZ Ltd. Sales Budget for the Year Ended 31 March XXXX Particulars Units Selling Price (P.U) Total Sales Value (Rs.) Product A Product B Total 5000 10000 75 80 375000 800000 1175000 20 LEADING TO THE PREPARATION OF THE MASTER BUDGET When all the necessary functional budgets have been prepared, the budget officer will prepare the master budget which may consist of budgeted profit and loss account and budgeted balance sheet. These are in fact the budget summaries. When the master budget is approved by the board of directors, it represents a standard for the achievement of which all the departments will work. On the basis of the various budgets (schedules) prepared earlier in this study, we prepare below budgeted income statement and budgeted balance sheet. Illustration: Floatglass Manufacturing Company requires you to present the Master budget for the 31 March 2012 from the following information: Sales: Toughened Glass Bent Glass Direct Material Cost Direct Wages Factory Overheads: Indirect Labour Works Manager Foreman Rs. 500 per month Rs. 400 per month 2.5% on Sales Rs. 600000 Rs. 200000 60% of Sales 20 workers @ Rs. 150 per month 21 Stores and Spares Depreciation on Machinery Repairs and Maintenance Other Sundries Administration, selling and Distribution Expenses Rs. 12600 Rs. 3000 Rs. 8000 10% on Direct Wages Rs. 36000 per year Solution: Master Budget for the Year Ending 31 March 2012 Particulars Amount (Rs.) Sales: Toughened Glass Bent Glass Total Sales Less: Cost of Production: Direct Material Direct Wages Prime Cost (A) Fixed Factory Overhead: 480000 36000 516000 600000 200000 800000 Amount (Rs.) 22 Works Manager’s Salary Foreman’s Salary Depreciation Light and Power Total Fixed Factory Overhead (B) Variable Factory Overhead: Stores and Spares Repairs and Maintenance Sundry Expenses Total Variable Factory Overhead (C) Works Cost (A+B+C) Gross Profit (Sales- Works Cost) Less: Administration, Selling and Distribution Expenses Net Profit 6000 4800 12600 3000 26400 20000 8000 3600 31600 574000 226000 36000 190000 23 CAPITAL EXPENDITURE BUDGET: The capital expenditure budget represents the planned outlay on fixed assets like land, building, plant and machinery, etc. during the budget period. This budget is subject to strict management control because it entails large amount of expenditure. The budget is prepared to cover a long period of years and it projects the capital costs over the period in which the expenditure is to be incurred and the expected earnings. The preparation of this budget is based on the following considerations: 1. Overhead on production facilities of certain departments as indicated by the plant utilization budget. 2. Future development plans to increase output by expansion of plant facilities. 3. Replacement requests from the concerned departments 4. Factors like sales potential to absorb the increased output, possibility of price reductions, increased costs of advertising and sales promotion to absorb increased output, etc. Merits/Advantages: 1. It outlines the capital development programme and estimated capital expenditure during the budget per iod. 2. It enables the company to establish a system of priorities. When there is a shortage of funds, capital rationing becomes necessary. 3. It serves as a tool for controlling expenditure. 4. It provides the amount of expenditure to be incorporated in the future budget 24 summaries for calculation of estimated return on capital employed. 5. This enables the cash budget to be completed. With other cash commitments capital expenditure commitment should also be considered for the completion of the budget. 6. It facilitates cost reduction programme, particularly when modernization and renovation is covered by this budget. 25 FIXED AND FLEXIBLE BUDGETS Fixed Budget: According to Chartered Institute of Management Accountants of England, â€Å"a fixed budget is a budget designed to remain unchanged irrespective of the level of activity actually attained†. A fixed budget shows the expected results of a responsibility center for only one activity level. Once the budget has been determined, it is not changed, even if the activity changes. Fixed budgeting is used by many service companies and for some administrative functions of manufacturing companies, such as purchasing, engineering, and accounting. Fixed Budget is used as an effective tool of cost control. In case, the level of activity attained is different from the level of activity for budgeting purposes, the fixed budget becomes ineffective. Such a budget is quite suitable for fixed expenses. It is also known as a static budget. Essential conditions: 1. When the nature of business is not seasonal. 2. There is no impact of external factors on the business activities 3. The demand of the product is certain and stable. 4. Supply orders are issued regularly. 5. The market of the product should be domestic rather than foreign. 6. There is no need of special labour or material in the production of the products. 7. Supply of production inputs is regular. 8. There is a trend of price stability. Generally, all above conditions are not found in practice. Hence fixed budget is not important 26 in business concerns. Merits/advantages: 1. Very simple to understand 2. Less time consuming Demerits/Disadvantages: 1. It is misleading. A poor performance may remain undetected and a good performance may go unrealized. 2. It is not suitable for long period. 3. It is also found unsuitable particularly when the business conditions are changing constantly. 4. Accurate estimates are not possible. Flexible Budget According to Chartered Institute of Management Accountants of England,†a flexible budget is defined as a budget which, by recognizing the difference between fixed, semi-variable and variable costs is designed to change in relation to the level of activity attained.† Unlike static (fixed) budgets, flexible budgets show the expected results of a responsibility center for several activity levels. You can think of a flexible budget as a series of static budgets for different levels of activity. Such budgets are especially useful in estimating and controlling factory cos ts and operating expenses. It is more realistic and practicable because it gives due consideration 27 to cost behaviour at different levels of activity. While preparing a flexible budget the expenses are classified into three categories viz. 1. Fixed, 2. Variable, and 3. Semi-variable. Semi-variable expenses are further segregated into fixed and variable expenses. Flexible budgeting may be resorted to under following situations: 1. In the case of new business venture due to its typical nature it may be difficult to forecast the demand of a product accurately. 2. Where the business is dependent upon the mercy of nature e.g., a person dealing in wool trade may have enough market if temperature goes below the freezing point. 3. In the case of labour intensive industry where the production of the concern is dependent upon the availability of labour. Merits/ Advantages: 1. With the help of flexible budget, the sales, costs and profit may be calculated easily by the business at various levels of production capacity. 2. In flexible budget, adjustment is very simple according to change in business conditions. 3. It also helps in determination of production level as it shows budgeted costs with classification at various levels of activity along with sales. Hence the management can easily select the level of production which shows the profit predetermined by the owners of the bu siness. 4. It also shows the quantity of product to be produced to earn determined profit. 28 Demerits/Disadvantages: 1. The formulation of flexible budget is possible only when there is proper accounting system maintained, perfect knowledge about the factors of production and various business circumstances is available. 2. Flexible Budget also requires the system of standard costing in business. 3. It is very expensive and labour oriented. Need for flexible budget: 1. Seasonal fluctuations in sales and/or production, for example in soft drinks industry; 2. A company which keeps on introducing new products or makes changes in the design of its products frequently; 3. Industries engaged in make-to-order business like ship building; 4. An industry which is influenced by changes in fashion; and 5. General changes in sales. 29 Illustration: A factory which expects to operate 7,000 hours, i.e., at 70% level of activity, furnishes details of expenses as under: Particulars Variable Expenses Amount (Rs.) 1260 Semi- Variable Expenses 1200 Fixed Expenses 1800 The semi-variable expenses go up by 10% between 85% and 95% activity and by 20% above 95% activity. Construct a flexible budget for 80, 90 and 100 per cent activities. Solution: Particulars Budgeted Hours Variable Expenses Semi-Variable Expenses Fixed Expenses Total Expenses Recovery Rate Per Hour 70% 7000 1260 1200 1800 4260 0.61 80% 8000 1440 1200 1800 4440 0.55 90% 9000 1620 1320 1800 4740 0.53 100% 10000 1800 1440 1800 5040 0.50 30 Difference between Fixed and Flexible Budget: Fixed Budget Flexible Budget It does not change with actual volume of It can be recasted on the basis of activity activity achieved. Thus it is known as rigid level to be achieved. Thus it is not rigid. or inflexible budget. It operates on one level of activity and under It consists of various budgets for one set of conditions. It assumes that there different levels of activity. will be no change in the prevailing conditions, which is unrealistic. Here as all costs like fixed, variable and Here analysis of variance provides useful semi-variable are related to only one level information as each cost is analyzed of activity so variance analysis does give useful information. If the budgeted and actual activity levels differ Flexible budgeting at different levels of significantly, then the aspects like cost activity facilitates the ascertainment of ascertainment and price fixation do not give a cost, fixation of selling price and tendering correct picture. of quotations. a meaningful basis of not according to its b ehaviour. Comparison of actual performance with It provides budgeted targets will be meaningless comparison of the actual performance with specially when there is a difference the budgeted targets. between the two activity levels. 31 BIBLIOGRAPHY 1 ICAI Module on Cost Accounting 2 Newsletters and opinions published by ICAI 3 http://en.wikipedia.org/wiki/Budget 4 www.icai.org

The significance of the social classes concept

The significance of the social classes concept Andersen Taylor (2007) define class mobility as the movement between different classes. This type of mobility can either be downward or upward in nature. Social classes are cultural or economical arrangements of groups within a society. Class becomes a very crucial object that political scientists, sociologists, economists, social historians, and anthropologists use for their various analysis purposes. Within social sciences, the social class is usually talked over by considering social stratification. In the Western world, stratification particularly includes upper class, middle class, and lower class and each of the three classes can be further classified into occupational classes (Edgell, 1993). In a number of societies, particularly in the United States, the concept of class mobility is a very significant social idea, with her citizens considering that every individual has got a chance to climb up the social class ladder. An individuals social class can be determined by a number of factors for instance, occupation, education, wealth or access to money, and race. These are very crucial factors that place people within different social classes within any given society particularly the societies in the Western world. The factor such as race can bring about a help or a hindrance for class mobility depending on an individuals race and the society in consideration, as well as culture, manners, and the family history. In some societies for example, an individual who has a lot of liquid money might be regarded as being in upper class, while in other societies, this individual might not be considered to belong to the upper class owing to other factors such as the individuals occupation and family history. An example in this case is a pawnbroker who has done very well, but might not belong to the upper class in spite of having a lot of money like a famous banker, while the children of the pawnbroker might possi bly join the upper class as they may develop most prestigious occupations (Andersen Taylor, 2007). As seen, most of the Western nations are generally divided into lower, middle, and upper class. Each of these classes has its own characteristic features which differentiates it from the other classes. The lower class is characteristic of laborers who earn low income as they acquired limited education, and this makes the individuals in the class to acquire only few opportunities for economic or educational progress. At times, a member of the lower class may have a lot of money just like the member in the topmost class, but still will be classified under lower class because the family background or the occupation that he or she is engaged in. The members within the middle class are seen to be economically stable having attained more educational opportunities. As well in the middle class, the individuals have got increased social opportunities due to the idea that their class status is elevated. The upper class forms the stratum the social structure with lowest population of individual s. This class constitutes individuals with well established social positions including increased prestige as well as better economic security (Saunders, 1990). In most of the societies within the Western world, the goal of individuals within the lower and middle classes is the upward class mobility as they believe that higher social classes are more socially and economically secure. Achieving the class mobility can be done through various ways for instance; an individual who is attempting to attain class mobility can aggressively pursue social and educational opportunities while another individual can center on laying the groundwork so that the future generations of his or her family will find themselves in the highest social class stratum. An example in this case, is an individual in the lower or middle class, who works very hard to acquire college fees to ensure that his or her children have chances which would no be attained (Ferrante, 2007). Within some societies, individuals experience downward class mobility as well. Downward class mobility becomes a great fear among many people who usually feel that their social ranks are unstable. Experiencing a radical change in fortunes may become an indication for a family which belongs to a higher class to fall down within the class stratification, usually when the changes persevere over many subsequent generations. Those individuals who experience downward class mobility are usually exposed to a good deal of prejudice from individuals within the former social stratum as well as the individuals within the social class in which they end up. With different generations in the world, social class mobility can either occur within or across the generation. The type of social class mobility that occurs within a generation is referred to as intra-generational mobility while the social class mobility that occurs across generations is called inter-generational mobility (Saunders, 1990). Intra-generational mobility can be defined as the changes regarding social status within a single lifetime. This type of mobility occurs within a given generation. Intergenerational mobility can be defined as the changes regarding social status that happen from the parents generation to the generation of their children. Thus the intergenerational mobility occurs across a number of generations. The definitions are very crucial during the analysis concerning the manner in which social status change from a given time period to another, as well as whether the social status of parents can determine an individuals own social status. In most case, sociologists usually center on the intergenerational mobility since this is the easiest in depicting changes across generations when compared to the intra-generational mobility. The sociologists use this information to determine if inequality within a given culture changes with time (Jr, 2009). Intergenerational mobility is merit based as well as non-merit based. In this case, it is the ability and hard work which influences social mobility. Parents race, wealth, luck, and gender can also affect the intergenerational mobility. Intergenerational mobility focuses on how parents can influence their childrens social mobility. Quality education is very important since the children can obtain highest marks and therefore gain prestige. Parents can as well make significant connections with those people who belong to higher social classes so that their social network will become wider. These parents who form their childrens social capital tend to increase the social mobility of the children. Recent researchers have collected relevant data concerning the families economic mobility across generations. The researchers have considered the probability of attaining a given income distribution in relation to where the parents were socially positioned. According to the researchers, 42 perce nt of the children whose parents were in the lowest quintile end up in the bottom quintile; 23 percent of the children ended up in the second quintile; 19 percent of the children ended up in the middle quintile; 11 percent of them end up in the fourth quintile; and 6 percent ended up in the topmost quintile (Goldthorpe, 2006). The social upward mobility becomes difficulty due to some given barriers. Education is a very important factor which can enhance or hinder upward mobility depending on how an individual has attained in it. Those individuals who achieve lowly in their academics do not usually continue with higher education such that they find themselves no where in the competitive world education wise during the time of searching for the prestigious white collar jobs. The lowly educated individuals engage themselves in the lowly paying jobs which are a characteristic of low class. Without taking a step in advancing the educational status, these individuals continue being in the lowest social class. Poverty is another factor which hinders social upward mobility, in that, the children inmost poor families do not develop enough in terms of psychological and behavioral development. Families also affect their childrens social mobility, in that; some families do not adopt strategies to support the children for instance, access to social, cultural, and financial capital as well as social networks of contact to access prestigious opportunities (Andersen Taylor, 2006). Factors like higher attainment in education enable individuals to move from lower social classes to the topmost class, since they can secure well paying jobs. Parents in well-off families who might be in the middle class, encourages their children to get into the topmost class as they ensure their children get sufficient psychological and behavioral development. Parents in some families adopt some strategies to support their children, for example access to social, cultural, and financial capital. The parents also have good social networks of contact which they use to access the most valued opportunities (Andersen Taylor, 2006).

Location Determinants of FDI in Transition Regions

Location Determinants of FDI in Transition Regions An essential aspect of globalization in past period has been the progressing grows in foreign direct investment (FDI). According to assessments of UNCTAD (2000) experts estimation, since 1979 to 1999 the volume of the world FDI funds to worlds GDP boosted by 16 per cent and relatively the proportion of world FDI streams increased by 14 per cent. Such a progressive expansion explains as the FDI determinants plays a leading role in development of any countrys economy, in terms of macro and micro parameters (Lipsey, 2001). Most of time FDI is provided with developed countrys strong market orientations to emerging countries, where market is weak. To expose most the effective conditions which are attracts FDI determinants in the host regions, a number of researches have been done. As a result of this study has concluded that there is a large impact on a market size, GNP and economic growth rather than investment incentives. However, the circumstances of FDI are various in each country because all of them have weak and strong markets and therefore have different outcomes of FDI stocks. The transition regions such as CIS and CEE regions have been recently studied comprehensively. There is a large empirical literatures implemented the FDI effects, as an engine machine for the transition regions. Due to advantages that related to the introduction of new technologies and innovations, new managerial techniques, development of additional skills, increased capitals, improvement of working conditions and the development of the industrial sectors in the transition regions (Caves, 1974 and Perez, 1997). Although, several policy makers viewed that FDI activities might provide negative effects on countrys economic development. This diversification followed by foreigners intensity in the host markets. The traditional debate stands for relationship among FDI and the prospects for economic growth. The study is divided into six parts. Chapter two will examine the results of several empirical studies of FDI activities, by examining series of positive and negative effects on the transition regions economies. Chapter three will review the mechanism of FDI activity by exampling its various types. Moreover, this chapter will briefly estimate FDI types affects on transition companies. Chapter four draws economic overview of the Kazakhstans market condition and the intensity of economy growth since the country gained its independence, and furthermore, will illustrate foreign direct investment environment. Chapter five contains FDI challenges and problems in the Kazakhstan oil and gas field industries, and will show government strategies against foreign investors. Finally, the last chapter will conclude with the summary and implications of the study. 2. Literature review Over the past years the endowments of Foreign Direct Investment (FDI) are becoming to be very important issue for transition countries. As the FDI activities contribute certain volume of assistances to the national economic growth. However the issue of FDI activities are often stands to be as the implicit hypothesis, in terms of its flows that transports benefit to the host regions economy. The impact of such disputes generally depends on FDI forms behaviour that it takes. The several evidence of empirical literatures have drawn series of positive and negative features of FDI as a basis of assistance growth for transition regions, some of which are examined below. The article by Kozima ( ) has expressed a macroeconomic explication of the FDI behaviours. Kozimas observation analysed that FDI ought to operate as channel trade for the productivity goods and thereby its direction should be followed by the market forces rather than the micro level characteristics. The FDI flows transfer and promote productivity level growth in terms of technology, management skills and know-how from the developed industries to the developing industries. As the outcome of such investment types follow by the improvement of the welfare conditions and by the increase of the industries income. The case can describe the Japanese FDI activities in Asian regions. On the other hand, in some terms FDI activities correspond to negative effects of its location decisions. This presents the case of the presence of more technology advantaged foreign company in an emerging country, where domestic industry might not be comparatively competitive and efficient to compete with the adv antaged foreign company. Therefore, the presence of more advantaged foreign company under such conditions can simply take over domestic firms market shares and decrease countrys economic welfare growth. The case explains by the United States FDI activities after the second war. De Gregorio (1992) stated that FDI may bring several benefits that persuade economic development by its advanced technologies and skilled knowledges, as such factors may promote productivity growth in emerging regions. De Gregorios studies have estimated several facts on economic growth in Latin America. This followed by increasing investment growth which is approximately implemented 0.6 per cent of GDP growth annually from 1950 to 1985. Likewise, Blomstrom and Lipsey (1992) examined FDIs positive externalities. However, such estimations studied under certain conditions that followed by high performed regions and therefore implemented positive performances. According to their studies, countries that only have attained certain level of returns can benefit from FDI activities. This can be correlated to human capitals that provide different income returns in transition regions. As well educated and skilled labour population can utilize the benefits of advanced technologies to the whole economy. The model of Malign emphasizes the potential interaction among FDI that realized by foreign company under the imperfectly competitive industry and a host region with imperfectly competitive domestic market. Hence the foreign firms operation in such market faces with several barriers to gain access into a market, and thus this increase market concentration instead of decreasing. (Cardoso and Dornbush 1989; Grieco 1986) In this term the presence of foreign company can simply turn down domestic savings and investment capacities by taking out rents and funds activity. Moreover, such case can basically trough out domestic firms from local business activities. The international firms might reinvest their capital flows to related industries in the host region and expand their market powers. The repatriation of such reinvestment profits may take out capital from the host region. Far from providing an encouraging impact on profits distribution and social environment improvements by foreigners might sustain a small power of local business partners and suppliers. As they utilize inappropriate intensive technology that might generate small number of labour forces, whereas consigning employees to the category of the unemployed, and this turns down them to set up more productive occupations. Their rigid control over advanced technology and skilled management channels may put off the favourable spillovers and externalities. It is commonly acknowledged that attracting FDI spillovers promote development effects, as the FDI activities symbolize as an essential source of technological spillovers, and as one of the resourceful and practical tools for improvement and upgrading of transition industries. (Dunning and Narula 2004) In fact, FDI spillovers have been enthusiastically supported under the Washington consensus as a universal remedy that leads economic growth and expansion. Because, structural changes highly amalgamate macroeconomic stabilization strategies along with strategies that increase FDI flows. However, the benefit levels are considerably various and the results from FDI assistances procedure are not always positive. (Lall and Narula 2004) Aitken and Harrison (1999) estimated the spillover effects to domestic companies in Venezuela. They investigated exceptionally limited effects of spillovers level. In addition, this spillover levels were mostly delivered from joint ventures. This suggested that relations among foreign and domestic company produce some amount of spillovers. However, its effects can not capture the whole economy. This can be explained when the foreign company in some way induced productivity growth but its financial sector would not be able to capture the plant stage, although it ought to capture even at the aggregate stage. The effects of political intensity have been examined by several policymakers and suggested that relationship among FDI inflows and host country firstly based on the political stability. Alesina and Perotti (1996) examined the impact of political vulnerabilities on economic development and investment. They implemented that an increase of the political intensity in the host region leads to decrease of investment flows. By implementing index of political instabilities that stands beyond of political assassinations, corruption and coups. Campos and Nugent (2002) analysed the causal linkages among investment and growth index by utilizing pooled panel statistics. According to their investigation results, it suggested that there are not so many evidences for the negative linkages among political instability and GDP growth. However, in terms of investment facilities, there are strong causalities of political vulnerability to investment decline. The relation among political volatility and asset markets has been examined by several policymakers. Robin, Liew and Stevens (1996) have examined factors of political volatility in transition regions. According to their analyses the importance of asset returns stands to be more significant in transition regions than in developing regions. As Bussiere and Mulder (1996) implemented their investigation in the twenty three regions and proposed that political vulnerabilities in economic models broadly explicate economic decline the aptitude of economic model to explicate economic decline of transition region. Moreover, they stated such conditions are vulnerable to economic crises when election consequences under uncertainty. Kutan and Zhou (1995) investigated that political intensity in Poland during 1990s had introduced economic reforms that influenced foreign exchange returns and bid-ask spreads. According to their investigation, these events reflected by political volatility that seriously harmed the national currency value in international exchange market. This consequently boosted the bid-ask spreads under the foreign exchange transactions that formulated bid-ask spreads to be more expensive for foreign investors. Likewise, Melvin and Tan (1996) examined political volatilities on foreign exchange market by their studies that implemented similar causes. Ivo Feierabend and Rosalind Feierabend (1966) formulated their Feieraben measure on political instability. This theory based on the countrys political vulnerabilities that considered the amount and concentration of political aggressiveness behaviour that takes place within a nation. According to their definition on political instability it is: the amount of Aggression directed by individual or  groups within the political system against other groups  or against the complex of officeholders and individuals  and groups associated with them. Or, conversely, it is  the amount of aggression directed by these officeholders  against other individuals, groups, or officeholders within  the polity. Using this characterization Feierabends have examined various indicate scales of political vulnerability that based on the amount and concentration of political actions. Feierabends have segregated thirty categories of political actions that were given by various weights. As the more destabilise actions, then the higher influences it obtains. For example, during the election of public servants is estimated to be zero, as this was not followed by aggressiveness of political intensity. However, in cases of assassination of high politic figures, corruptions and coups had estimated up to 5 and 7 scales. In the case of locational decision of foreign companies the political intensity of host regions might lead them out off their domestic market. Aharoni (1960) and Thunell (1977) showed that the intensity of political instability might be very significant measure in the foreign investment activities in the way of location decision. This has been examined that foreign investors in general consider the political vulnerability of the host regions in an unsystematic way. However, a foreign company that operates abroad should put forward its attention on political intensity. This would facilitate in the formulation of tactic for choosing the location and expand further its investment flows. As in some circumstances the host governments might change their political intensity in terms of nationalization. 3. The role of FDIs The priorities of developing economies are obviously comprise under constant revenue growth for their economies through strengthening technological capabilities, increasing investment rates, and enhancing the competitiveness of their production in the global marketplace. By providing the opportunities to economic growth, creating employment potentialities and conserving the environment for future population. As the globalisation and liberalization of the world economy constrains the developing economies to upgrade abilities and resources of their economies. The modern global can be classified by speedy progress in knowledge and economical capability under competitive circumstances. Therefore, in globalizing world the economic growth can be implemented constantly only if states can promote privileged value-added performances to supply goods and services for their open market strategies. Among these attitudes MNEs and FDI activities can apply for an essential function in complementing their efforts. As their assets is one of the main features of promoting local markets or entire enterprises to the international market. FDI has been characterized differently by several empirical literatures. The International Monetary Fund (IMF) describes FDI as an investment made to acquire a lasting interest in a foreign enterprise with the purpose of having an effective voice in its management (Bjorvatn, 2000). Generally, FDI activities are undertaken by Multinational Enterprises (MNEs) that provide a huge capital of investment flows over the world. These investment flows classified as a market seeking, its purpose to serve for an existing market. For instance, owing to a high tariff rates, the company needs to relocate its activities to the emerging country, as firms activities were previously supplied by exporting. The motivation for such investment in the host economy explains in better serve for a local market through production, market growth and market size. The case of Japanese FDI in vehicle production in the US can be implemented as the market seeking (Duning, 1993). The efficiency seeking appears with a firm that involves in gaining economic scale and scope activities from the host economy. In this perspective, close relations with the western countries would lead to corporate network linkages and the presence of high transport and communication costs will encourage more of efficiency-seeking FDI. Finally, the asset seeking or resource seeking occurs when a firm invest into a foreign country to find natural and low cost labour force resources that not available within their country. It might follow by natural resources, cheap labour forces and furthermore, by raw materials. Again the case of the UN and Japan can present the view of asset seeking by searching for a cheap labour force in Asia. In contrast to market seeking, it is able to serve for a home and for a third countrys market. This tendency follows particularly by industrialised sectors that subsidized by MNEs. Therefore, such accessibilities in physical infrastructure and skilled and cheap labour forces are the main trends of resource seeking. 3.1. FDI types In analysing market entry through FDI flows, there two choices such as, greenfield investment and takeover of an existing company. Through greenfield investments a company which invests a small amount of inputs, and afterwards when demand increases it can enlarge that investment. A greenfield investment frequently sets up from building a new company after the governments of host countries would approve that, because of the location perhaps can be in the profitable place and produce a new production capacity. In discussing another type of FDI is the takeover of an existing business through the acquisitions and mergers (MA). In other words, foreign companies appear in the emerging countries and purchases already existing local business by gaining the packages of the company, as a result, such companies turn out to be an affiliated. In the past years MA have seen massive surge by reaching more than 50 per cent (Theodore 1998). Admittedly, there are several trends that foreign firms seek to invest their capitals abroad. These features were partly analysed by Dunnings OLI theory. As Dunning (1993) describes three conditions that firms carry to take FDI activities. Ownership advantages- appears, when the foreign firm is capable to compete with the domestic firm. It can be attained through specific skills or assets that follow by advanced management and technological capabilities. Companies that endowed with ownership advantages basically enlarge their operations in a foreign country to internalize the growing benefits from ownership advantages. Location advantages- aspects as natural and mineral resources, transport costs and low prices, access to the domestic market determine the presence of the investment. Moreover, factors such as social and political stability and business environment that follows by stable prices and sustainable budget deficit determines location. Internalization advantages- occurs, when the foreign firm is able to retain its multiple activities, rather than licensing or franchising technology to local firms. The case can be implemented, when the firm prevents the technology or assets imitation by rival firms. According to OLI theory, all these criterions should be fulfilled for firms to invest in the host economies. In terms of investment incentives, Dunning (1993) pointed that OLI theory is generally stands for a characteristic of the host country and for the MNEs. This follows by attracted or specific location, skilled or cheap labour forces, infrastructure and political stability. Undoubtedly, these trends are very significant for the location of FDI assets, however, the significance of investment incentives have raised in the past years. Over the world countries have lowered their entry barriers to persuade a massive amount of foreign subsidizes and generated FDI incentives to attract more foreign investment flows. Therefore, operations such as low taxes, attractive tariff regimes, and market preferences, investment in infrastructure, financial grants and loans for the foreign firms took the form of investment incentives. Basically, FDI incentives are similar in developed and developing regions. Regarding to UNSTAD (2001), a small number of regions participate for FDI activities without subs idies nowadays. This report estimates that 95 per cent of adjustments in FDI legislations for the 1990s were encouraging to foreign companies and furthermore, these adjustments followed by FDI promotions and incentives. The motivation of such reasons primarily tended by prospect of seeing positive spillovers inflows into host economies UNSTAD (2001). In the context of positive spillovers host governments tries to attract foreign subsidizes to their economies as they considers that FDIs spillovers generate positive externalities to the domestic companies by transferring know-how and advanced technology. The following terms can be implemented Domestic companies might benefit from foreign production processes as they diffuse new technologies. It can be implemented through labour turnover and through imitation. As the foreign firms gain access into domestic market equilibrium, it is makes domestic companies to be more an incentive to protect market shares income (Ponomareva, 2000). These systematic alterations might cause various sorts of spillovers that bring to productivity growth into domestic companies, as the spillovers effects from foreign companies can be significant. On the other hand, several literatures provided that spillovers effects can have negative forms. In article by Aitken and Harrison (1999) the negative impacts of spillovers introduced on the domestic firms productivity, in terms of market steeling effect. For example, when the foreign company gain access to the foreign market and take over local market shares by its technology advantages. In other words, the MNEs advantages can simply trough out domestic firms productivities and so, local companys productivity declines. 3.2. Spillover activities and types. There is a large empirical study that implements the significance of spillover activities in the host economies. According to Blomstrom and Kokko (1997), the importance of the FDI spillovers is not only the investment in a new plant and equipment, but also transfers of technology, skills and capital for the host countries. Consequently, FDI arrives through managerial and financial resources, technical support and strategic assets. This can be companys brand name that takes place by comparative advantage to domestic entrepreneurs. Spillover activities can be taken during foreign companies presence that provides efficiency and productivity to the domestic firms. The positive spillovers followed by foreign investment enterprises that provide benefits to domestic companies, in terms of productivity technologies that do not exhaust cost for gains (UN-ECE, 2001). In the perspective of the FDI spillovers, several policymakers have concerned that the presence of foreign firms lead to productivity growth of domestic companies. Whereas, other authors implemented that, there is also a negative impact of FDI spillovers. One of the common explanations of FDI in transition regions is assistance in restructuring domestic firms. As Wallner (1998) suggest that, partly an emerging firm occurs under the soft budget constraint and thereby FDIs activity might provide in a positive way. As the presence of the foreign firms provide various incentives to reduce funds to domestic companies and as a result involves in companies restructuring. Another positive feature of FDI spillovers importance is transfer of technology and know-how to domestic firms. On the other hand, this can also provide negative spillovers. For instance, in terms of product market under imperfect competition, that can follow by a considerable decrease of the market shares of the local firm s and moreover, can trough out domestic firms from the market. The literature by De Gregorio and Lee (1998) and Kokko and Borensztien (1994) stated that FDI spillovers can generate in positive way, if only the technology development among foreign and domestic company is not so great. The trends of positive spillovers were found in the next literatures Blomstrom, Sjoholm (1999) in Indonesia, Caves (1974) in Australia and Globerman (1979) in Canada. In the case of negative spillovers the following studies such as Kornings (1999) in Poland and Romania and Aitken and Harrison (1999) in Venezuela have implemented such effects Spillover activities determine two approaches such as direct and indirect approach. The direct approach examines through statistical examples, as the spillover activities are directly correlated to presence of foreign firms (Blomstrom et.al.1999). The purpose of the direct approach frequently leads to productivity measure of local firms to the MNEs presences. There is on common method that utilizes evaluation of production functions that estimates through the foreign firms presences upon industry productivities and on its levels. In studies of econometric the spillover activities might expose the total impact of productivity to host firms under the foreign presence. However, the impacts are frequently not specific nor implement its effects (Blomstrom and Kokko 2003). The indirect approach examines through channels in which FDI spillovers may take in, and afterwards estimate the forcefulness of those channels. Likewise direct approach, there is a large studies on its channels, but it can be difficult to implement general conclusion from these studies (Blomstrom et.al.1999). Another spillover activity in the host industries persuaded by two types such as inter (vertical) and intra (horizontal) industry spillovers. The vertical spillovers appear when foreign company provide impacts to the domestic suppliers. This can be under different industries that engaged in a long term contract among foreign company and a domestic supplier (Smarzynka, 2002). The horizontal spillovers result from the occurrence of the MNEs that brings competition to the host economy. There are five channels that chase horizontal spillover activities such as competition, transfer of technology and RD, industrial management, demonstration and imitation activities and human capital and labour turnover (Blomstrom et. at. 1999). According to UNECE report (2001), on intra industry spillovers in transition regions have estimated FDIs horizontal and vertical impacts. The following (Table 2) estimated that basically the presences of foreign companies did not perform better and thus, they have not generated the expected positive spillovers to local companies. Virtually, the FDI spillovers turned to be negative in these manufacturing regions. Generally, CEE regions were under negative coefficient performances. The exception was followed with Estonias and Russias manufactures which are presented positive coefficients. The results suggested that it is not unexpected as the initial conditions and economic environment was critical during the transition period. Those countries essentially had experienced various shocks and thus, local companies were not capable to react to the challenges that followed by FDI. This however, can be temporary factors and these regions will be more competitive with the next FDI flows. 3.3. FDI flows in transition economies. Over the decade ago the former Soviet Countries and central and eastern Europe regions have been transferred themselves from centrally planned system to open market economy. This systemic transformation has seen a massive upsurge in FDI inflows that afterwards assisted to recovery their internal economic vulnerabilities. As the initial stages of economy conditions experienced several economic shocks and therefore domestic growth of these regions went down. According to UNECE report (2001) the industrial productivity decreased by 34 per cent over the transition regions. Furthermore, in some regions it even followed by 64 per cent. This economic collapse was stated by macroeconomic imbalances, monetary overhangs, and by external debts. Consequently, these host regions were under extremely necessitate of liberalization, privatization and stabilization reforms that followed with the foreign subsidizes. There are strong evidences that FDI tends to boost the initial stage of economic perfo rmances. The following trends were considered such as, FDI frequently helps to the host country to amalgamate into the global economy. FDI increases the aggregate rate of investment. FDI generates transformation of hard technology that process technology and product. FDI engenders relocation of soft technology that processes organization, management and sourcing technologies FDI tends to encourage networking and subcontracting patterns that conducive for host firms to improve their technologies and productivities. (Dyker 1999) Thus, the importance of FDI in these regions was not only in supplying funds for the acquisition of new equipment, but also it seen transformation of advanced technology and organisational forms that led from more developed economies. Attracting FDI assets are considerable issue for the transition regions, as it leads to catch up policy with more developed economies by improving their economic efficiency. According to Transition Report (EBRD 2007), in the past decade the former soviet regions and central and eastern European countries have been successfully stabilized their economic circumstances. As their living standards have improved and moreover political, social, economic and legal issues were adopted and improved by state agencies. The transformation processes however implemented in different stage as their initial conditions were varied over all regions. Some of regions have simply been mistreated by foreign investors as the investment inflows directed more toward to some regi ons. (EBRD, 1999, Henriot, 2003) This discrepancy might be implemented by the high economic dynamism of more advanced transition economies. There are some regions that have been under the greater concern to investors due to of their mineral wealth resources, and close frontiers to the European Union countries. Moreover, in the last 10 years, it was obvious that foreign investors were in favour to a more stable political economy and to a favourable environment that had followed a consistent privatization policy (Henriot, 2003). According to table the following four regions experienced a large amount of FDI flows. It is clearly seen that Hungarys state was dominant in foreign investment flows. Its economic condition was greater then in other regions and furthermore political relations with the western countries brought attention of foreigners. As the view of Hungary implemented beneficial infrastructure and economical ability to adopt foreign subsidizes. In addition, in its early sophisticated privatization strategy on state owned firms made favourable environment for foreign investors. Likewise FDI flows in Poland and Czech Republic also had experienced a fast growth. This rapid increase was experienced through acquisition of state owned enterprises that had involved foreign investors. The Slovaks FDI inflows entered later in contrast to Hungary, Poland and Czech Republic and therefore had the lowest rate. Although, in most cases its small sized enterprises were privatized by foreign investors. Through the government policy that could proceed with the well managed economic reforms and externa l relations with the neighbouring regions. The total stock of FDI inflows for country size by population and GDP analysed that Hungary and the Czech Republic have succeeded significantly then Poland and Slovak Republic. Nevertheless, these regions tended to recover faster in contrast to the CIS regions. In the perspective of CIS regions, FDI stocks remain with low attitudes, despite their performance in accomplishing macroeconomic policy and managing relatively high growth rate. (Table 2.1.) illustrates that regions such as Kazakhstan and Azerbaijan have chased the largest proportion of FDI stocks, whereas Tajikistan demonstrated the lowest amount of FDI stocks. Similarly, shares of FDI stocks in GDP for Azerbaijan and Kazakhstan have performed better. In terms of per capita of FDI stocks, regions as Kyrgyzstan and Azerbaijan have performed worthily, whereas Uzbekistan and Azerbaijan turned with the lowest rate. In comparing the result of FDI stock levels of Central European to Central Asian regions, the Republic of Kazakhstan, Azerbaijan and Russia were shown with the better perform attitudes. This impact followed with large inflows of FDI stocks in oil and gas fields. Nevertheless, these regions levels of FDI stocks are still smaller then in other central European regions. The case of such underperformance of the some CIS regions can be attributed by the tardiness in privatization, incapability and disinclination in reform strategies and inefficienc Location Determinants of FDI in Transition Regions Location Determinants of FDI in Transition Regions An essential aspect of globalization in past period has been the progressing grows in foreign direct investment (FDI). According to assessments of UNCTAD (2000) experts estimation, since 1979 to 1999 the volume of the world FDI funds to worlds GDP boosted by 16 per cent and relatively the proportion of world FDI streams increased by 14 per cent. Such a progressive expansion explains as the FDI determinants plays a leading role in development of any countrys economy, in terms of macro and micro parameters (Lipsey, 2001). Most of time FDI is provided with developed countrys strong market orientations to emerging countries, where market is weak. To expose most the effective conditions which are attracts FDI determinants in the host regions, a number of researches have been done. As a result of this study has concluded that there is a large impact on a market size, GNP and economic growth rather than investment incentives. However, the circumstances of FDI are various in each country because all of them have weak and strong markets and therefore have different outcomes of FDI stocks. The transition regions such as CIS and CEE regions have been recently studied comprehensively. There is a large empirical literatures implemented the FDI effects, as an engine machine for the transition regions. Due to advantages that related to the introduction of new technologies and innovations, new managerial techniques, development of additional skills, increased capitals, improvement of working conditions and the development of the industrial sectors in the transition regions (Caves, 1974 and Perez, 1997). Although, several policy makers viewed that FDI activities might provide negative effects on countrys economic development. This diversification followed by foreigners intensity in the host markets. The traditional debate stands for relationship among FDI and the prospects for economic growth. The study is divided into six parts. Chapter two will examine the results of several empirical studies of FDI activities, by examining series of positive and negative effects on the transition regions economies. Chapter three will review the mechanism of FDI activity by exampling its various types. Moreover, this chapter will briefly estimate FDI types affects on transition companies. Chapter four draws economic overview of the Kazakhstans market condition and the intensity of economy growth since the country gained its independence, and furthermore, will illustrate foreign direct investment environment. Chapter five contains FDI challenges and problems in the Kazakhstan oil and gas field industries, and will show government strategies against foreign investors. Finally, the last chapter will conclude with the summary and implications of the study. 2. Literature review Over the past years the endowments of Foreign Direct Investment (FDI) are becoming to be very important issue for transition countries. As the FDI activities contribute certain volume of assistances to the national economic growth. However the issue of FDI activities are often stands to be as the implicit hypothesis, in terms of its flows that transports benefit to the host regions economy. The impact of such disputes generally depends on FDI forms behaviour that it takes. The several evidence of empirical literatures have drawn series of positive and negative features of FDI as a basis of assistance growth for transition regions, some of which are examined below. The article by Kozima ( ) has expressed a macroeconomic explication of the FDI behaviours. Kozimas observation analysed that FDI ought to operate as channel trade for the productivity goods and thereby its direction should be followed by the market forces rather than the micro level characteristics. The FDI flows transfer and promote productivity level growth in terms of technology, management skills and know-how from the developed industries to the developing industries. As the outcome of such investment types follow by the improvement of the welfare conditions and by the increase of the industries income. The case can describe the Japanese FDI activities in Asian regions. On the other hand, in some terms FDI activities correspond to negative effects of its location decisions. This presents the case of the presence of more technology advantaged foreign company in an emerging country, where domestic industry might not be comparatively competitive and efficient to compete with the adv antaged foreign company. Therefore, the presence of more advantaged foreign company under such conditions can simply take over domestic firms market shares and decrease countrys economic welfare growth. The case explains by the United States FDI activities after the second war. De Gregorio (1992) stated that FDI may bring several benefits that persuade economic development by its advanced technologies and skilled knowledges, as such factors may promote productivity growth in emerging regions. De Gregorios studies have estimated several facts on economic growth in Latin America. This followed by increasing investment growth which is approximately implemented 0.6 per cent of GDP growth annually from 1950 to 1985. Likewise, Blomstrom and Lipsey (1992) examined FDIs positive externalities. However, such estimations studied under certain conditions that followed by high performed regions and therefore implemented positive performances. According to their studies, countries that only have attained certain level of returns can benefit from FDI activities. This can be correlated to human capitals that provide different income returns in transition regions. As well educated and skilled labour population can utilize the benefits of advanced technologies to the whole economy. The model of Malign emphasizes the potential interaction among FDI that realized by foreign company under the imperfectly competitive industry and a host region with imperfectly competitive domestic market. Hence the foreign firms operation in such market faces with several barriers to gain access into a market, and thus this increase market concentration instead of decreasing. (Cardoso and Dornbush 1989; Grieco 1986) In this term the presence of foreign company can simply turn down domestic savings and investment capacities by taking out rents and funds activity. Moreover, such case can basically trough out domestic firms from local business activities. The international firms might reinvest their capital flows to related industries in the host region and expand their market powers. The repatriation of such reinvestment profits may take out capital from the host region. Far from providing an encouraging impact on profits distribution and social environment improvements by foreigners might sustain a small power of local business partners and suppliers. As they utilize inappropriate intensive technology that might generate small number of labour forces, whereas consigning employees to the category of the unemployed, and this turns down them to set up more productive occupations. Their rigid control over advanced technology and skilled management channels may put off the favourable spillovers and externalities. It is commonly acknowledged that attracting FDI spillovers promote development effects, as the FDI activities symbolize as an essential source of technological spillovers, and as one of the resourceful and practical tools for improvement and upgrading of transition industries. (Dunning and Narula 2004) In fact, FDI spillovers have been enthusiastically supported under the Washington consensus as a universal remedy that leads economic growth and expansion. Because, structural changes highly amalgamate macroeconomic stabilization strategies along with strategies that increase FDI flows. However, the benefit levels are considerably various and the results from FDI assistances procedure are not always positive. (Lall and Narula 2004) Aitken and Harrison (1999) estimated the spillover effects to domestic companies in Venezuela. They investigated exceptionally limited effects of spillovers level. In addition, this spillover levels were mostly delivered from joint ventures. This suggested that relations among foreign and domestic company produce some amount of spillovers. However, its effects can not capture the whole economy. This can be explained when the foreign company in some way induced productivity growth but its financial sector would not be able to capture the plant stage, although it ought to capture even at the aggregate stage. The effects of political intensity have been examined by several policymakers and suggested that relationship among FDI inflows and host country firstly based on the political stability. Alesina and Perotti (1996) examined the impact of political vulnerabilities on economic development and investment. They implemented that an increase of the political intensity in the host region leads to decrease of investment flows. By implementing index of political instabilities that stands beyond of political assassinations, corruption and coups. Campos and Nugent (2002) analysed the causal linkages among investment and growth index by utilizing pooled panel statistics. According to their investigation results, it suggested that there are not so many evidences for the negative linkages among political instability and GDP growth. However, in terms of investment facilities, there are strong causalities of political vulnerability to investment decline. The relation among political volatility and asset markets has been examined by several policymakers. Robin, Liew and Stevens (1996) have examined factors of political volatility in transition regions. According to their analyses the importance of asset returns stands to be more significant in transition regions than in developing regions. As Bussiere and Mulder (1996) implemented their investigation in the twenty three regions and proposed that political vulnerabilities in economic models broadly explicate economic decline the aptitude of economic model to explicate economic decline of transition region. Moreover, they stated such conditions are vulnerable to economic crises when election consequences under uncertainty. Kutan and Zhou (1995) investigated that political intensity in Poland during 1990s had introduced economic reforms that influenced foreign exchange returns and bid-ask spreads. According to their investigation, these events reflected by political volatility that seriously harmed the national currency value in international exchange market. This consequently boosted the bid-ask spreads under the foreign exchange transactions that formulated bid-ask spreads to be more expensive for foreign investors. Likewise, Melvin and Tan (1996) examined political volatilities on foreign exchange market by their studies that implemented similar causes. Ivo Feierabend and Rosalind Feierabend (1966) formulated their Feieraben measure on political instability. This theory based on the countrys political vulnerabilities that considered the amount and concentration of political aggressiveness behaviour that takes place within a nation. According to their definition on political instability it is: the amount of Aggression directed by individual or  groups within the political system against other groups  or against the complex of officeholders and individuals  and groups associated with them. Or, conversely, it is  the amount of aggression directed by these officeholders  against other individuals, groups, or officeholders within  the polity. Using this characterization Feierabends have examined various indicate scales of political vulnerability that based on the amount and concentration of political actions. Feierabends have segregated thirty categories of political actions that were given by various weights. As the more destabilise actions, then the higher influences it obtains. For example, during the election of public servants is estimated to be zero, as this was not followed by aggressiveness of political intensity. However, in cases of assassination of high politic figures, corruptions and coups had estimated up to 5 and 7 scales. In the case of locational decision of foreign companies the political intensity of host regions might lead them out off their domestic market. Aharoni (1960) and Thunell (1977) showed that the intensity of political instability might be very significant measure in the foreign investment activities in the way of location decision. This has been examined that foreign investors in general consider the political vulnerability of the host regions in an unsystematic way. However, a foreign company that operates abroad should put forward its attention on political intensity. This would facilitate in the formulation of tactic for choosing the location and expand further its investment flows. As in some circumstances the host governments might change their political intensity in terms of nationalization. 3. The role of FDIs The priorities of developing economies are obviously comprise under constant revenue growth for their economies through strengthening technological capabilities, increasing investment rates, and enhancing the competitiveness of their production in the global marketplace. By providing the opportunities to economic growth, creating employment potentialities and conserving the environment for future population. As the globalisation and liberalization of the world economy constrains the developing economies to upgrade abilities and resources of their economies. The modern global can be classified by speedy progress in knowledge and economical capability under competitive circumstances. Therefore, in globalizing world the economic growth can be implemented constantly only if states can promote privileged value-added performances to supply goods and services for their open market strategies. Among these attitudes MNEs and FDI activities can apply for an essential function in complementing their efforts. As their assets is one of the main features of promoting local markets or entire enterprises to the international market. FDI has been characterized differently by several empirical literatures. The International Monetary Fund (IMF) describes FDI as an investment made to acquire a lasting interest in a foreign enterprise with the purpose of having an effective voice in its management (Bjorvatn, 2000). Generally, FDI activities are undertaken by Multinational Enterprises (MNEs) that provide a huge capital of investment flows over the world. These investment flows classified as a market seeking, its purpose to serve for an existing market. For instance, owing to a high tariff rates, the company needs to relocate its activities to the emerging country, as firms activities were previously supplied by exporting. The motivation for such investment in the host economy explains in better serve for a local market through production, market growth and market size. The case of Japanese FDI in vehicle production in the US can be implemented as the market seeking (Duning, 1993). The efficiency seeking appears with a firm that involves in gaining economic scale and scope activities from the host economy. In this perspective, close relations with the western countries would lead to corporate network linkages and the presence of high transport and communication costs will encourage more of efficiency-seeking FDI. Finally, the asset seeking or resource seeking occurs when a firm invest into a foreign country to find natural and low cost labour force resources that not available within their country. It might follow by natural resources, cheap labour forces and furthermore, by raw materials. Again the case of the UN and Japan can present the view of asset seeking by searching for a cheap labour force in Asia. In contrast to market seeking, it is able to serve for a home and for a third countrys market. This tendency follows particularly by industrialised sectors that subsidized by MNEs. Therefore, such accessibilities in physical infrastructure and skilled and cheap labour forces are the main trends of resource seeking. 3.1. FDI types In analysing market entry through FDI flows, there two choices such as, greenfield investment and takeover of an existing company. Through greenfield investments a company which invests a small amount of inputs, and afterwards when demand increases it can enlarge that investment. A greenfield investment frequently sets up from building a new company after the governments of host countries would approve that, because of the location perhaps can be in the profitable place and produce a new production capacity. In discussing another type of FDI is the takeover of an existing business through the acquisitions and mergers (MA). In other words, foreign companies appear in the emerging countries and purchases already existing local business by gaining the packages of the company, as a result, such companies turn out to be an affiliated. In the past years MA have seen massive surge by reaching more than 50 per cent (Theodore 1998). Admittedly, there are several trends that foreign firms seek to invest their capitals abroad. These features were partly analysed by Dunnings OLI theory. As Dunning (1993) describes three conditions that firms carry to take FDI activities. Ownership advantages- appears, when the foreign firm is capable to compete with the domestic firm. It can be attained through specific skills or assets that follow by advanced management and technological capabilities. Companies that endowed with ownership advantages basically enlarge their operations in a foreign country to internalize the growing benefits from ownership advantages. Location advantages- aspects as natural and mineral resources, transport costs and low prices, access to the domestic market determine the presence of the investment. Moreover, factors such as social and political stability and business environment that follows by stable prices and sustainable budget deficit determines location. Internalization advantages- occurs, when the foreign firm is able to retain its multiple activities, rather than licensing or franchising technology to local firms. The case can be implemented, when the firm prevents the technology or assets imitation by rival firms. According to OLI theory, all these criterions should be fulfilled for firms to invest in the host economies. In terms of investment incentives, Dunning (1993) pointed that OLI theory is generally stands for a characteristic of the host country and for the MNEs. This follows by attracted or specific location, skilled or cheap labour forces, infrastructure and political stability. Undoubtedly, these trends are very significant for the location of FDI assets, however, the significance of investment incentives have raised in the past years. Over the world countries have lowered their entry barriers to persuade a massive amount of foreign subsidizes and generated FDI incentives to attract more foreign investment flows. Therefore, operations such as low taxes, attractive tariff regimes, and market preferences, investment in infrastructure, financial grants and loans for the foreign firms took the form of investment incentives. Basically, FDI incentives are similar in developed and developing regions. Regarding to UNSTAD (2001), a small number of regions participate for FDI activities without subs idies nowadays. This report estimates that 95 per cent of adjustments in FDI legislations for the 1990s were encouraging to foreign companies and furthermore, these adjustments followed by FDI promotions and incentives. The motivation of such reasons primarily tended by prospect of seeing positive spillovers inflows into host economies UNSTAD (2001). In the context of positive spillovers host governments tries to attract foreign subsidizes to their economies as they considers that FDIs spillovers generate positive externalities to the domestic companies by transferring know-how and advanced technology. The following terms can be implemented Domestic companies might benefit from foreign production processes as they diffuse new technologies. It can be implemented through labour turnover and through imitation. As the foreign firms gain access into domestic market equilibrium, it is makes domestic companies to be more an incentive to protect market shares income (Ponomareva, 2000). These systematic alterations might cause various sorts of spillovers that bring to productivity growth into domestic companies, as the spillovers effects from foreign companies can be significant. On the other hand, several literatures provided that spillovers effects can have negative forms. In article by Aitken and Harrison (1999) the negative impacts of spillovers introduced on the domestic firms productivity, in terms of market steeling effect. For example, when the foreign company gain access to the foreign market and take over local market shares by its technology advantages. In other words, the MNEs advantages can simply trough out domestic firms productivities and so, local companys productivity declines. 3.2. Spillover activities and types. There is a large empirical study that implements the significance of spillover activities in the host economies. According to Blomstrom and Kokko (1997), the importance of the FDI spillovers is not only the investment in a new plant and equipment, but also transfers of technology, skills and capital for the host countries. Consequently, FDI arrives through managerial and financial resources, technical support and strategic assets. This can be companys brand name that takes place by comparative advantage to domestic entrepreneurs. Spillover activities can be taken during foreign companies presence that provides efficiency and productivity to the domestic firms. The positive spillovers followed by foreign investment enterprises that provide benefits to domestic companies, in terms of productivity technologies that do not exhaust cost for gains (UN-ECE, 2001). In the perspective of the FDI spillovers, several policymakers have concerned that the presence of foreign firms lead to productivity growth of domestic companies. Whereas, other authors implemented that, there is also a negative impact of FDI spillovers. One of the common explanations of FDI in transition regions is assistance in restructuring domestic firms. As Wallner (1998) suggest that, partly an emerging firm occurs under the soft budget constraint and thereby FDIs activity might provide in a positive way. As the presence of the foreign firms provide various incentives to reduce funds to domestic companies and as a result involves in companies restructuring. Another positive feature of FDI spillovers importance is transfer of technology and know-how to domestic firms. On the other hand, this can also provide negative spillovers. For instance, in terms of product market under imperfect competition, that can follow by a considerable decrease of the market shares of the local firm s and moreover, can trough out domestic firms from the market. The literature by De Gregorio and Lee (1998) and Kokko and Borensztien (1994) stated that FDI spillovers can generate in positive way, if only the technology development among foreign and domestic company is not so great. The trends of positive spillovers were found in the next literatures Blomstrom, Sjoholm (1999) in Indonesia, Caves (1974) in Australia and Globerman (1979) in Canada. In the case of negative spillovers the following studies such as Kornings (1999) in Poland and Romania and Aitken and Harrison (1999) in Venezuela have implemented such effects Spillover activities determine two approaches such as direct and indirect approach. The direct approach examines through statistical examples, as the spillover activities are directly correlated to presence of foreign firms (Blomstrom et.al.1999). The purpose of the direct approach frequently leads to productivity measure of local firms to the MNEs presences. There is on common method that utilizes evaluation of production functions that estimates through the foreign firms presences upon industry productivities and on its levels. In studies of econometric the spillover activities might expose the total impact of productivity to host firms under the foreign presence. However, the impacts are frequently not specific nor implement its effects (Blomstrom and Kokko 2003). The indirect approach examines through channels in which FDI spillovers may take in, and afterwards estimate the forcefulness of those channels. Likewise direct approach, there is a large studies on its channels, but it can be difficult to implement general conclusion from these studies (Blomstrom et.al.1999). Another spillover activity in the host industries persuaded by two types such as inter (vertical) and intra (horizontal) industry spillovers. The vertical spillovers appear when foreign company provide impacts to the domestic suppliers. This can be under different industries that engaged in a long term contract among foreign company and a domestic supplier (Smarzynka, 2002). The horizontal spillovers result from the occurrence of the MNEs that brings competition to the host economy. There are five channels that chase horizontal spillover activities such as competition, transfer of technology and RD, industrial management, demonstration and imitation activities and human capital and labour turnover (Blomstrom et. at. 1999). According to UNECE report (2001), on intra industry spillovers in transition regions have estimated FDIs horizontal and vertical impacts. The following (Table 2) estimated that basically the presences of foreign companies did not perform better and thus, they have not generated the expected positive spillovers to local companies. Virtually, the FDI spillovers turned to be negative in these manufacturing regions. Generally, CEE regions were under negative coefficient performances. The exception was followed with Estonias and Russias manufactures which are presented positive coefficients. The results suggested that it is not unexpected as the initial conditions and economic environment was critical during the transition period. Those countries essentially had experienced various shocks and thus, local companies were not capable to react to the challenges that followed by FDI. This however, can be temporary factors and these regions will be more competitive with the next FDI flows. 3.3. FDI flows in transition economies. Over the decade ago the former Soviet Countries and central and eastern Europe regions have been transferred themselves from centrally planned system to open market economy. This systemic transformation has seen a massive upsurge in FDI inflows that afterwards assisted to recovery their internal economic vulnerabilities. As the initial stages of economy conditions experienced several economic shocks and therefore domestic growth of these regions went down. According to UNECE report (2001) the industrial productivity decreased by 34 per cent over the transition regions. Furthermore, in some regions it even followed by 64 per cent. This economic collapse was stated by macroeconomic imbalances, monetary overhangs, and by external debts. Consequently, these host regions were under extremely necessitate of liberalization, privatization and stabilization reforms that followed with the foreign subsidizes. There are strong evidences that FDI tends to boost the initial stage of economic perfo rmances. The following trends were considered such as, FDI frequently helps to the host country to amalgamate into the global economy. FDI increases the aggregate rate of investment. FDI generates transformation of hard technology that process technology and product. FDI engenders relocation of soft technology that processes organization, management and sourcing technologies FDI tends to encourage networking and subcontracting patterns that conducive for host firms to improve their technologies and productivities. (Dyker 1999) Thus, the importance of FDI in these regions was not only in supplying funds for the acquisition of new equipment, but also it seen transformation of advanced technology and organisational forms that led from more developed economies. Attracting FDI assets are considerable issue for the transition regions, as it leads to catch up policy with more developed economies by improving their economic efficiency. According to Transition Report (EBRD 2007), in the past decade the former soviet regions and central and eastern European countries have been successfully stabilized their economic circumstances. As their living standards have improved and moreover political, social, economic and legal issues were adopted and improved by state agencies. The transformation processes however implemented in different stage as their initial conditions were varied over all regions. Some of regions have simply been mistreated by foreign investors as the investment inflows directed more toward to some regi ons. (EBRD, 1999, Henriot, 2003) This discrepancy might be implemented by the high economic dynamism of more advanced transition economies. There are some regions that have been under the greater concern to investors due to of their mineral wealth resources, and close frontiers to the European Union countries. Moreover, in the last 10 years, it was obvious that foreign investors were in favour to a more stable political economy and to a favourable environment that had followed a consistent privatization policy (Henriot, 2003). According to table the following four regions experienced a large amount of FDI flows. It is clearly seen that Hungarys state was dominant in foreign investment flows. Its economic condition was greater then in other regions and furthermore political relations with the western countries brought attention of foreigners. As the view of Hungary implemented beneficial infrastructure and economical ability to adopt foreign subsidizes. In addition, in its early sophisticated privatization strategy on state owned firms made favourable environment for foreign investors. Likewise FDI flows in Poland and Czech Republic also had experienced a fast growth. This rapid increase was experienced through acquisition of state owned enterprises that had involved foreign investors. The Slovaks FDI inflows entered later in contrast to Hungary, Poland and Czech Republic and therefore had the lowest rate. Although, in most cases its small sized enterprises were privatized by foreign investors. Through the government policy that could proceed with the well managed economic reforms and externa l relations with the neighbouring regions. The total stock of FDI inflows for country size by population and GDP analysed that Hungary and the Czech Republic have succeeded significantly then Poland and Slovak Republic. Nevertheless, these regions tended to recover faster in contrast to the CIS regions. In the perspective of CIS regions, FDI stocks remain with low attitudes, despite their performance in accomplishing macroeconomic policy and managing relatively high growth rate. (Table 2.1.) illustrates that regions such as Kazakhstan and Azerbaijan have chased the largest proportion of FDI stocks, whereas Tajikistan demonstrated the lowest amount of FDI stocks. Similarly, shares of FDI stocks in GDP for Azerbaijan and Kazakhstan have performed better. In terms of per capita of FDI stocks, regions as Kyrgyzstan and Azerbaijan have performed worthily, whereas Uzbekistan and Azerbaijan turned with the lowest rate. In comparing the result of FDI stock levels of Central European to Central Asian regions, the Republic of Kazakhstan, Azerbaijan and Russia were shown with the better perform attitudes. This impact followed with large inflows of FDI stocks in oil and gas fields. Nevertheless, these regions levels of FDI stocks are still smaller then in other central European regions. The case of such underperformance of the some CIS regions can be attributed by the tardiness in privatization, incapability and disinclination in reform strategies and inefficienc