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Foreign Direct Investment Master - Essay Example
Author : maryamwaelchi
Pages 6 (1506 words)
Foreign Direct Investment or FDI has rapidly increased during the last few decades as the overall network of countries and institutions favoring the FDI have expanded at great pace. (Mody & Ashoka, 2007). Foreign Direct Investment plays a critical role in the development of any country because of its potential impact on economic growth…
However, despite its economic significance, on political grounds, FDI is a very controversial term as it is marred by controversies and political victimization especially in developing countries.
Iran is one such case where FDI has mostly remained a political issue despite the fact that Iran held one of the largest oil reserves in the world. Over the period of time, due to international sanctions, the process of Foreign Direct Investment has remained stagnant due to political hostility towards Iran. However, despite such situation, due to Iran's strategic oil & gas reserves, many countries such as China, Pakistan, India as well as other European countries made foreign direct investment into the country.
Jensen (2004) is of the view that institutional lending by supernatural institutions such as IMF has very complex and perplexing impacts on the economic performance of the countries due to institutional interference and policy dictations made by such institutions lower the flow of foreign direct investments into the developing countries.
Foreign Direct Investment has multiple consequences for the countries as it not only create an impact on the economic situation of the country but also have consequences o ...