Foreign Direct Investment - Assignment Example

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This essay presents FDI which involves the ownership of entities abroad for production, research and development, access of raw materials and other resources. FDI is considered superior to other forms of capital inflows because FDI enables the transfer of technology…
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Foreign Direct Investment
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Download file to see previous pages From the discussion it is clear that countries seek FDI due to the technological benefits that boost production mechanisms in several sectors across the economy. FDIs also create adequate employment opportunities, thereby enhancing the economic growth prospects of the host country. FDIs, nonetheless, increase the quality of products within the market, hence giving the consumers a wider range of products from which they can choose.This paper stresses that FDI is responsible for stimulating the economic development of a target country. Besides, the FDI enables companies to enjoy the benefits that accrue from larger markets in the global economy. Therefore, FDI ensures that industries capitalize on their sales through international presence. While at it, FDI creates new employment opportunities, thereby increasing the income and the purchasing power of people within an economy. This leads to economic growth. As stated earlier, FDI presents a boost in the human capital resources, through sharpening the knowledge and competence of the cross-border workforce. Many companies also benefit from the tax incentives in their respective business fields. Apart for the development of knowledge, FDI enables the transfer of resources in form of technology, skills and raw materials, hence limiting the disparities between the organizational revenues and costs. FDI can hinder the domestic investment by offering excess competition. In addition, the risk of political instability threatens to destabilize the operations of foreign investments. ...Download file to see next pagesRead More
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