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Foreign Direct Investment - Assignment Example

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The assignment "Foreign Direct Investment" states that The amount of FDI (Foreign Direct Investment) in a country has largely been attributed to the effectiveness of the host states and their legal apparatus and machinery in the attraction and accommodation of these investors…
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Foreign Direct Investment
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Download file to see previous pages FDI strategy is not always a beneficial means of investment and in this vein, this essay will look at the effectiveness of the conditions in the Host countries which possibly attract FDI growth in relation to western and underdeveloped countries and whether the data from large organizations like the World Bank is to be trusted in making competitive decisions about the FDI success and strategy. In this vein, the question will discuss alternatively with examples of whether the success factors for FDI hold true for some industries and maybe disadvantageous to some industries.

Foreign direct investment or FDI can be defined as an investment made to obtain long-lasting shares or interest in out of country enterprises. There will always be a parent enterprise with some sort of a foreign affiliation the co-operation of whom would be known as a transnational corporation (TNC) and the parent enterprise will have a 10% or more share control of its foreign affiliate. The Post World War II the position was that the US was dominating the world share of FDI by three-quarters of the entire market share. The US at this point had around three-quarters of the Global FDI (1945 and 1960). However today in the age of globalization the FDI is no longer a phenomenon restricted to OECD countries. FDI growth is very important for the modern global economy with the FDI stocks now constituting over 20 percent of global GDP. Inward FDI happens when there is an investment of foreign capital within a country’s own local resources and can be attracted by tax holidays and tax subsidies, low rates of interest, and more investor-friendly laws. However, ownership restraints or differential performance requirements are likely to discourage FDI. Outward FDI is a local investment in foreign resources and is encouraged by a positive role of the host governments in providing insurance and tax breaks for these people who want to trade abroad. Therefore “Foreign Direct Investment” can be both inwards and outwards for the economy. ...Download file to see next pages Read More
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