The liberalization of markets worldwide, an effect of globalisation, has led to the elimination of the barriers for developing investment activities abroad, i.e. to a country different from the country of residence of the investor…
Download file to see previous pages...
The liberalization of markets worldwide, an effect of globalisation, has led to the elimination of the barriers for developing investment activities abroad, i.e. to a country different from the country of residence of the investor. Gradually, the foreign direct investment, or else the FDI, as this activity has been characterized, see also the next section, has become a common phenomenon in countries worldwide. It should be noted that the FDI has been related to a series of important benefits but it has been also found to have a series of disadvantages/ drawbacks for the host countries economy. This issue is explored in this paper. A series of examples and case studies are presented aiming to show the various aspects of the involvement of FDI in the economy of host countries. In general, the benefits of FDI are more compared to its disadvantages. However, the latter could lead to severe turbulences if they are not appropriately addressed. In this context, appropriate measures should be taken in advance for the control of such effects either in the short or the long term.The term ‘foreign direct investment’ is used in order to show ‘the acquisition of assets by the residents of one country for the purpose of controlling the production and other activities of a firm in another country, the host country’ (Moosa 2002, p.1). FDI, as described above, can have many forms, including the Greenfield investment (indicating whole ownership of the acquired asset) and the Joint Venture (shared ownership of the acquired asset)....
2006). The last decades, there is a trend towards the continuous expansion of FDI as a method of financing various projects. This fact is made clear in the Graph 1 below where the balance among the FDI, the bank loans and the portfolio investment as methods of financing, is analytically presented. Graph 1 – Forms of capital inflows from 1978 up to 1995 (Source: Loungani et al. 2001) The decision of an organization to proceed to FDI is usually based on the potentials for profit. Moreover, it seems that Western organizations are likely to use different criteria when having to decide their entrance in a foreign country through FDI. Bevan et al. (2004) tried to identify the factors that lead organizations in Western countries to get involved in FDI. The above researchers found that factors like ‘labour costs, market size and proximity’ (Bevan et al. 2004, p.775) are likely to have a decisive role for Western organizations to invest on a foreign economy in the form of FDI. On the other hand, it has been revealed that the potential risks of the host country economy are not expected to discourage Western organizations from proceeding to FDI. However, it seems that the documents and the commentaries published by international bodies can influence the decision of Western organizations on FDI. In the study of Bevan et al. (2004) reference is made to the influence of the announcements of the European authorities on the level of FDI outflows from countries of EU to third countries worldwide. Similar findings have been revealed through the research of Globerman et al. (2002). The above researchers tried to identify the level at which the political and legal environment of a country can influence the level of FDI towards
...Download file to see next pagesRead More
Cite this document
(“The impacts of foreign direct investment on host country economies Essay”, n.d.)
Retrieved from https://studentshare.org/macro-microeconomics/1412533-3-using-examples-and-case-studies-discuss-and-evaluate-the-impacts-of-foreign-direct-investment-on-host-country-economies
(The Impacts of Foreign Direct Investment on Host Country Economies Essay)
“The Impacts of Foreign Direct Investment on Host Country Economies Essay”, n.d. https://studentshare.org/macro-microeconomics/1412533-3-using-examples-and-case-studies-discuss-and-evaluate-the-impacts-of-foreign-direct-investment-on-host-country-economies.
Foreign Direct Investment is generally defined as investment of funds in a company of one country (host country), by a company of another country (home/investing/source country). A few years back, these funds were defined as direct investments in the form of buildings, machinery and equipment, but now with the changed and increased role of technology; the definition has been broadened to include investments in the form of acquisitions of management interest in an entity outside the investor’s home country.
The current research suggests that the effects of FDI on economic growth are complex. Their scope and magnitude depend on a number of factors, including the amount of knowledge capital, the complexity of R&D procedures, and even host countries’ financial market size. Current knowledge of FDI and its impacts on economic growth is mainly theoretical.
STATEMENT 1 This dissertation is being submitted in partial fulfilment of the requirements for the degree of MSc. Signed ……………………………………….. Date ………………………………………….. STATEMENT 2 This dissertation is the result of my own independent work/investigation, except where otherwise stated.
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.
Running head: WILDERNESS PROGRAMS ON JUVENILES Wilderness Programs on Juveniles [Name] [Course] [Professor’s name] [Date] Introduction: Wilderness programs on juveniles can be defined and exemplified in many ways. The programs are basically converted to bring the lost personalities in the right track of life.
This study gives an analysis of these factors in detail. This information will be of great significance to investors as it will act as a guide to them. The study gives a critical analysis of the issue at hand in an attempt to understand the general issue. This understanding will help in the process of coming up with the solutions.
foreign entity, which receives the investment, Foreign Direct Investment is capable of providing a source of products, processes, new technologies, capital, management skills and organizational technologies. Foreign Direct Investment significantly contributes to economic growth
This has led to most developing countries and to a large extends developing economies and those still in transition to divert they attention to FDI as the main source of economic development. Chaudhuri and Mukhopadhyay
11 Pages(2750 words)Essay
GOT A TRICKY QUESTION? RECEIVE AN ANSWER FROM STUDENTS LIKE YOU!
Let us find you another Essay on topic The impacts of foreign direct investment on host country economies for FREE!