This research will begin with the statement that foreign direct investment (FDI) is an investment established to accrue a lasting management interest in a business enterprise operating in a country other than the investor’s, defined according to residency…
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It is evidently clear from the discussion that for the host country, it provides new technologies, products, skills of management, capital, strengthens its currency and thus leads to economic development. However, these benefits are not realized automatically and evenly. Architecture of international investment and national policies are important in attracting FDI to many developing countries and in realization of its full benefits for development. Although FDI is beneficial to both host and home countries, it also arise some costs to them. The benefits which a host country expects rely on the co-operation of its government. In developing countries such as Kenya, FDI contributes a lot in their economic development and the governments are working extremely hard to attract it. Actually, the global market for these investments is highly competitive and countries seek them to improve their development efforts. Foreign Direct Investment is regarded to be less prone to a crisis because the direct investors usually have very long-term plans when engaging in such investments in host countries. It is also believed that FDI greatly contributes a lot to the economic growth of a host country than other types of capital inflows. Therefore, this paper seeks to critically examine the determinants, the benefits and the risks of Foreign Direct Investment in developing countries. It tends to broadly analyze the factors that attract foreign investments, the benefits that the country intends to gain from direct foreign investment and the dangers associated with these kinds of investments. Foreign direct investment determinants refer to the factors (political, economic and social factors) that can attract or deter foreign investors from investing in a particular country. Stable economy, political stability and good social status are likely to attract foreign investments. However, instability in these three areas will scare investors away.
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This paper purports to understand the relationship between the foreign direct investment and the growth and development of the underdeveloped and developing countries. The aim of the research project is to identify and explore the trends and patterns of Chinese foreign direct investment in Africa, with special focus on Nigeria and Ethiopia.
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).
Reportedly, DFI encompasses a broad spectrum of investment ranging from investment in existing companies, real estate, equity and capital market and even investment in the development of infrastructure. Acquisition of foreign entities and establishment of joint ventures abroad can also be categorized as DFI.
According to the study there is no single best-practice FDI policy or strategy. There is no unique execution of all the possible policies. The FDI strategy, within which FDI policies are framed, depends partly on pre-conditions. For instance, a large country with few local capabilities and weak trading road and rail network is unlikely to benefit significantly from attracting high-tech FDI.
According to the paper since the 1980s, foreign investment in developing countries has been directed increasingly at export-oriented projects. Most theories of foreign investment do not address the issue of the direction of foreign direct investment flows. Investment takes place rather than why it flows to a particular group of countries.
Africa especially is an area of interest since it has shown enormous growth in the recent years due to FDI than any other effort that has been carried out in the past. The paper critically explores the role of FDIs in the improvement of economic conditions of Africa and India as examples of its success.
f inflation with 2005 as base year, Openness in trade as a percentage (in current prices), LOG_UNEM, Number of telephone lines per 100 inhabitants in 2005, long run rate of interest, Per capita income growth rate(a)
a Predictors: (Constant), LOG_EXCH, Percentage of inflation
The impact of F.D.I varies with regard to the outlook of a given country. For a developing country the concept of F.D.I brings along the consideration of critically evaluating all the angles and aspects related to its processing
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
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