Foreign direct investment has increasingly been a business trend of multinational corporations within the global economy.Foreign Direct Investment is defined by Ho and Yiu Lau as the investment of a company in a foreign country which aims at acquiring a long-term economic interest in business enterprises within the host country. …
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Foreign direct investment has increasingly been a business trend of multinational corporations within the global economy.Foreign Direct Investment is defined by Ho and Yiu Lau as the investment of a company in a foreign country which aims at acquiring a long-term economic interest in business enterprises within the host country. 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. With the emergence of globalization and the global economy, FDI has played a leading role in the development of global business enterprises. Kennedy (2001, p. 585) say that the definition of foreign direct investment has been broadened with the increased change in the patterns of global investment by companies. As a result, FDI includes acquisition of managerial interests in companies and enterprises in foreign countries. The managerial interest may not involve investment in buildings or equipment but managerial decisions are determined by executives who are foreign to the host country. The rapid growth of companies which is attributed to the internationalization and use of technology has expanded FDI to incorporate the growth patterns of world economies as demonstrated by Constant and Yaoxing (2010, p. 99) Foreign direct investment is a reaction to the increased liberalization of business activities, changes and advancements in information and communication technology and capital market changes. Jermakowicz and Bellas (1997, p. 33) explain that through the liberalization of national and regional business regulatory frameworks and governance, foreign direct investment has been achieved. Globalization has enabled foreign direct investment to be achieved by international companies and corporations. It is however argued that information and communication technology has played the most significant role in the achievement of foreign direct investment. Technology has allowed companies to invest in foreign countries due to the ease of management that is made possible through the adoption and implementation of information systems. In return, foreign direct investment has enabled the process of internationalizing businesses and companies hence promoting the growth of the global economy as said by Fahim-Nader and Zeile (1995, p. 57). Foreign direct investment can take several forms. According to Driffield and Munday (2000, p. 21), there are many forms of foreign direct investment and these include joint ventures, construction of facilities, acquisitions, mergers, strategic alliance, licensing and input of technology. Joint ventures as a form of foreign direct investment includes a company engaging in a business endeavor with another company within a foreign country. The business activities of the joint venture are usually carried out within the host country. Joint ventures within foreign direct investment include two companies from two different countries coming together with an intention of undertaking a business in a specific industry for achievement of common goals. Belderbos, Jie-A-Joen and Sleuwaegen, (2002, p. 155) assert that in foreign direct investment, companies may construct facilities such as factories, hospitals, institutions or infrastructure in a foreign country. This form of foreign investment thus involves direct and active input of capital for construction of these facilities. The investor company that ventures in the foreign direct investment through building structures usually takes the ownership of these structures even though they provide economic benefits to the host country. Lowe (2006, p. 34) explains that acquisitions as a form of foreign direct investment includes a company acquiring the assets of another company within the foreign country. The acquisition of a foreign company makes the investing company the
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(“Foreign Direct Investment (FDI) Essay Example | Topics and Well Written Essays - 2500 words”, n.d.)
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(Foreign Direct Investment (FDI) Essay Example | Topics and Well Written Essays - 2500 Words)
“Foreign Direct Investment (FDI) Essay Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.org/management/1444858-define-foreign-direct-investment-fdi-discuss-and.
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.
Federal Reserve Bank of St. Louis Review 91(2), pp. 61-78. Dimelis, S. and Louri, H. Foreign Direct Investment and Technology Spillovers: Which Firms Really Benefit? [Online]. Available at: http://www.aueb.gr/imop/papers/DP149.pdf [Accessed on: 04 January 2013].
Why is the UK the TOP destination for Foreign Direct Investment (FDI) in the European Union? In light of this, to What Extent do Government Agencies (Both National and Local) Need to Actively Attract this Investment? Introduction: The United Kingdom remains the one of the most attractive and top destinations in European Union for “Foreign Direct Investment” (Definition of Foreign Direct Investment (FDI) 2010) with almost 728 projects, which are up by 7% than the year of 2009.
It can be defined as the purchasing of commodities from a domestic economy by a foreign entity or an investment from an overseas enterprise into another in a distant business or economy. Regardless of the development of commodities and trade with India and China, Sub Saharan Africa’s (SSA’s) economic performance has been quite poor in comparison with East Asia or South East where FDI has played significant role in economic development (Bartels, Kratzsch, and Eicher, 2008, p.1).
The closer linkage between and among global powers has precipitated more interdependence and better business opportunities among countries, but when economic crises strike more seriously than expected countries suffer economic losses, which sometimes cannot be solved by the International Financial Institutions (IFIs).
The author states that a multinational firm in a developed country may face higher labor costs and higher production costs when locating its subsidiaries in its own home country, while a shift overseas may involve a larger initial investment but is economically beneficial in the long run because the margin of profits are higher.
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
rategies that enable entities to diversify its assets and risk across diverse countries by engaging in contractual agreements with multiple potential partners. Companies may find it advantageous by producing in foreign countries compared to exporting to those countries based on
ome about as nations of the world have come to appreciate the need of making the world a global village where trade and economic engagements can take place in a more liberal manner (Aliber, 2010). An outstanding phenomenon that this situation has brought about is the increase in
realist point of view, instability is prevalent in some countries as they attempt to join the global market being the main cause; however, a liberal’s argument on the matter is more rational because it depends on local strategies that extend to the international environment.
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