This essay examines patterns of foreign direct investment throughout the 2000-2011 period in terms of a variety of conceptual frameworks. Patterns of foreign direct investment reveal not only the expanding nature of economic development, but also political and regulatory elements of these regions…
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The paper tells that increasing world globalization has created an environment wherein inflows and outflows of foreign direct investment (FDI) have become an essential source of the modern economy. FDI has been understood as a net inflow of investment to acquire a lasting interest in a foreign equity. While there are a variety of competing perspectives regarding the impact of foreign direct investment, a number of overarching perspectives view attracting FDI as a large contributor to economic development and prosperity. Within this context of understanding countries have mobilized in a process of development where one of the primary strategic approaches has been the procurement of foreign direct investment (FDI). Still, there are varying perspectives both on the most efficient approach to attracting this mode of investment, as well as to the qualitative benefit of such investments for the host country. Indeed, in the early parts of the 20th century many emerging regions resisted FDI on the grounds that it was a form of neo-colonialism. One of the overarching considerations in terms of patterns of foreign direct investment over the last decade has been the political and regulatory environment of the country receiving the inflow of investment. This understanding of FDI distinguishes itself from foreign direct investment as government aid to the developing. Indeed, it’s recognized that in the highest tier of FDI are African regions including the Democratic Republic of the Congo and Angola. (Moran, 2011). Rather, patterns of foreign direct investment are considered in terms of conceptual frameworks of attraction. An overarching qualitative examination of such foreign direct investment patterns between 2000 and 2011 demonstrates that broad scale political elements are greatly linked to foreign direct investment. One considers that to a large degree prominent outflows of FDI emerge from democratic host countries. It follows that the last decade of FDI is largely linked to political structures. Consider that for the decade under investigation Cuba didn’t receive positive FDI until as late as 2004 ("Foreign investment," 2011). Since this period the region has witnessed gradual increases in FDI as trade restrictions have been eased. Another prominent example is that of Russia. Long a communist country, for the early part of the 2000’s the region experienced extremely limited FDI; this trend changed dramatically in the middle part of the decade as Russia received some of the greatest world increases of FDI, before a sharp decline in 2009 ("Foreign investment," 2011). Afghanistan is another startling example as this country had received close to no FDI prior to United States military intervention; indeed, this is true of many of the turbulent Middle Eastern countries. While these are dramatic examples they present a comprehensive portrait of foreign direct investment as intimately coupled with political risks. It should come as no surprise that in large part global patterns of foreign direct investment between 2000-2011 are greatly influenced by democratic political structures. Theoretical perspectives have consistently linked foreign direct investment to government policy. The pervading logic behind these investments is not a matter of great complexity. In these regards, investors have been understood to remain more apt to invest long-term companies and corporate interests based on the host country’s ability to create policy measures that are most conducive to such investment. The complexity emerges as theorists attempt to determine the appropriate government climate for such investments. Currently the United
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In recent time, outward Foreign Direct investment has been significantly increased from China and India. Discuss the factors responsible for such a growth. Do you think International business theories (OLI and IDP) adequately explain the reasons for outward Foreign Direct investment?
It is treated as in important source of income for different countries. Global foreign direct investment (FDI) is the amount investment made by different Transnational Corporations (TNCs) in different countries of the world. There are generally two different types of investments which are: Inward foreign direct investment (FDI), and Outward foreign direct investment (FDI) This resulting sum of these two types of foreign direct investment is known as ‘net foreign direct investment (FDI) flow’, which can be either negative or positive (Wheeler, & Mody, 1992).
Research studies indicate that there is direct relationship between FDI and financial markets. According to the research studies, structural changes in financial markets have been used in attracting FDI. The general view is that stock markets have been established with the main reason of intermediating funds towards investment projects (Hui and Margarida 210).
FDI can also be defined as an investment of a company in a foreign country by building a factory within the host country. It is through a company’s direct investment in machinery, building and equipment in another country that foreign direct investment is made possible.
Inward FDI increased from 9.6% of GDP in 1990 to 26.7% in 2006. (Woodward, 2011). There has also been a recent flow of FDI towards developing economies and this has had a plethora of effects, both for home and host countries. (Raj and Sager, 2005). Foreign Direct Investment has over the last three decades aroused conflicting responses from the first and third world.
In the march towards been globalized, many companies have acquired great advantages by outsourcing skills and technology which is better in other countries (Ghemawat, 2011). A common practice these days is to have separated units of a company’s operation, where the designing, production and assembling are all done in different locations or in different countries, and then brought to the prime location (Click & Duening, 2005).
Some of these countries became full European Union (EU) members in May 2004. They also experienced a significant increase in foreign direct investment (FDI). As a consequence, the ratio of inward FDI stock to the 12 CEE countries studied here in total world inward FDI stock increased more than three-fold, from 0.81% in 1994 to 2.89% in 2004.
(Wikipedia, 2006). After the 1960's, foreign direct investments (FDI) have increased at a steady rate, with FDI stocks making up twenty percent of the world's Gross Domestic Product (GDP). Currently, China leads the world in foreign direct investments.
The author states that a multinational firm in a developed country may face higher labor costs and higher production costs when locating its subsidiaries in its own home country, while a shift overseas may involve a larger initial investment but is economically beneficial in the long run because the margin of profits are higher.
rategies that enable entities to diversify its assets and risk across diverse countries by engaging in contractual agreements with multiple potential partners. Companies may find it advantageous by producing in foreign countries compared to exporting to those countries based on
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