Political Views on FDI - Essay Example

Political Views on FDI Number Introduction and Differentiating Among the Political Views on FDI Knownfully as the Direct Foreign Investment, FDI virtually takes place when a firm directly invests in facilities, so as to produce or market a product or a service in a foreign country. FDI takes two main forms: the Greenfield Investment; and merging and/ or acquisitions. Among several views that define FDI, the two most popular ones are eclectic paradigm and political views. In turn, there are four political views on FDI.

These are radical view, the pragmatic nationalism view, the free market view and the shifting ideology view (Anderson, 2009). Comparing and Contrasting the Three Political Views of FDI The radical view is a Marxist economic and political view which holds the view that MNE is virtually an instrument of domination by imperialists. Because of this, the MNE serves as a tool for exploiting the host countries to the exclusive benefits of capitalist and imperialist home countries. The free market view is attributed to Adam Smith and David Ricardo, and holds that international production is to be distributed among countries, in respect to the theory of comparative advantage (Gary, 2002).

According to McKay and Seale (2000), MNE is therefore an instrument for dispersing the production of productions to the globe’s most efficient locations. Pragmatic nationalism has it that FDI hosts both costs and benefits. For instance, some of the benefits for the host country include the realization and accumulation of capital, technology, skills and jobs. The Political View of Choice From a personal standpoint, pragmatic nationalism is the most cogent explanation which comprehensively defines FDI and world trade.

Host countries benefit and incur costs in FDI. Benefits and Costs of FDI to a Host Country and To a Home Country from the Chosen Political According to pragmatic nationalism [the chosen perspective], the benefits to a host country are [increases in] capital, skills, technology and jobs. The drawbacks that a home country may incur are competition to local industries and a waning demand for local produce. ReferencesAnderson, C.D. (2009). FDIC: Federal Deposit Insurance Corporation. CHOICE: Current Reviews for Academic Libraries, 46 (8), 1556. Gary, R. (2002).

Federal Deposit Insurance Reform. Banking & Financial Services Policy Report, 21 (6), 1. McKay, P. & Seale, C. (2000). FDIC (Federal Deposit Insurance Corporation). Journal of Business & Finance Librarianship, 5 (3), 63 – 73.