This paper will tell about the importance of the foreign direct investment (FDI), the impact of FDI on the economics of a region, inward and outward FDI, the modes of FDI, the lessons from inward investment. FDI can play a crucial role in the infrastructural and the overall development of an economy…
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Foreign direct investment involves acquisition of managerial control in a company. The threshold of this form of ownership is 10% or more in UK. This varies across countries. With the liberalization of the various global economies in Africa and Asia this form of investment has grown considerably. Foreign direct investment (FDI) facilitates the interaction of two firms and economies with varying economic differences. The foreign investors invest their funds with a long term perspective to exploit the cheap labour costs, strategic advantages, rich natural resources, market etc of another economy. In short this form of investment involves investing within the firm but outside the region.
Importance of FDI
This form of investment provides the necessary capital required by some developing economies which might be difficult to generate through domestic means. Besides the financial resources the foreign direct investment also provides the opportunity to make use of sophisticated and latest technology. It has been seen that the companies with no prior experience face problems in the import of such technology as this is deemed to be risky as well as expensive.
With time FDI imparts a number of benefits to the host country that was hitherto not available. This includes upgrading of industrial operations, transferring of advanced technology, training the labour force, introduction of developed methods of accounting & modern management, developing the trading and finance related networks and up gradation of telecommunication related services. In sectors like services FDI uplifts the competitive strength of the host country by increasing the productivity of financial resources.
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(“Foreign direct investment Assignment Example | Topics and Well Written Essays - 1500 words - 1”, n.d.)
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(Foreign Direct Investment Assignment Example | Topics and Well Written Essays - 1500 Words - 1)
“Foreign Direct Investment Assignment Example | Topics and Well Written Essays - 1500 Words - 1”, n.d. https://studentshare.org/miscellaneous/1405465-foreign-direct-investment.
The author states that for the recipient economy, FDI inflows can trigger economic growth, through stimulating investment and employment in the economy. FDI inflows could assist in technology transfers that could prove to be more efficient in terms of production and thus, be of high assistance to the developing economies especially in case of LDCs.
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).
NIE is a diverse way of looking at organization. It combines economics, law, organizational theory and sociology. (M. Hage, 2007)There is this misconception that NIE is very western or US approach. Due to the erosion of value system even in developed countries led to social segregation which can hamper economic development.
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.
However, the recent economic progress of China and other Asian countries has enhanced the worth of investing in these countries. This has resulted in many European and American companies moving their manufacturing and R&D operations to counties like India and China.
The country has vast expanses of land defined by rocky plateaus, and mountains that occupy most of the land. Even though physical features segregate china into several regions, while people tend to segregate the nation in four areas that include south, north, northwest and Qinghai-Tibetan areas and owing to the differences in geography, residents in the regions have different lifestyles and customs.
However, as the deadline for entry to the EU gets closer, Bulgaria is encountering difficulties due to graft, corruption, organised crime, and bureaucratic inefficiency that threaten to delay the country's admittance but also its efforts to attract more foreign investors.
the effect of globalization was observed among the developed and developing countries, during that phase this cross border expenditure concept had started flowing all around the world. Within a decade, during 1990s it had been observed that number of global countries had become
As the report, Foreign Direct Investment, declares FDI promotes the competition in the domestic input market. FDI contributes to the development of human resources unlike other capital inflows. In addition, the profits generated from the FDIs are a contribution to the corporate tax. FDI contributes to the economic development of the host country.
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