Foreign Direct Investment (FDI) is perceived as one of the important measures of increasing economic globalization. As because of increasing globalization and international trade, transnational corporations (TNCs) are able to invest in different overseas projects and shift their operations to different regions of the world (Globerman, & Shapiro, 2003). It is important to understand and analyze the concept of the foreign direct investment as it is directly related with the globalization in the today’s world (Noorbakhsh, Paloni, & Youssef, 2001). Because of increasing globalization and international trade, more and more foreign investors are investing their money in different projects overseas. It is important to notice that overall foreign direct investment (FDI) increased to around $ 33 billion in the year 2008 as compared to $ 5 billion in the year 2000 (UNCTAD, 2010). However, there was sharp decline in global foreign direct investment (FDI) in the year 2009 to around $ 28 billion. This was because of the global economic recession. Overall economic recession and downturn forced the transnational corporations (TNCs) to cut down their overall investments and expenditures which in turn negatively influenced the global foreign direct investment (FDI). Most of these foreign direct investments (FDI) are directed towards the developing countries and least developed countries. The multinational corporations (MNCs) and transnational corporations (TNCs) are looking forward to exploit the abundance of low priced resources of these developing and under developed countries and thus shift more operations in these countries. Therefore, foreign investment flows from the developed countries towards least developed countries (Chakrabarti, 2001). The third world and developing countries are enriched with the resource of foreign direct investment (FDI). In the year 2010, overall global foreign direct investment (FDI) almost remained constant and reflected only a growth of around 0.7 percent. However, in the same year the foreign direct investment (FDI) to the developing countries increased by around 10 percent. Foreign direct investment (FDI) is important in order to maintain consistent growth and development all over the world (Blonigen, 2005). This facilitates the process of transferring the resources and funds from more developed countries to developing countries. Investors from developed countries are able to take advantage of relatively cheaper and low cost labour and other resources in the third world countries; while at the same time the third world countries are able to gain from the foreign investment which helps them in improving the overall economic condition (Neuhaus, 2005). For this very reason, many third world and developing countries have come up with different methods and strategies for attracting more foreign direct investment (FDI). For example, trade free zones, special tariffs, and easy regulations for foreign investors. Owing to the high importance of the topic and the strong relation of the topic with the globalization and overall global economic condition, in this report an attempt has been made to analyze and evaluate
INTRODUCTION Foreign direct investment (FDI) is the amount of investment made by the investors in the foreign business ventures and enterprises. In reference to a particular country, foreign direct investment (FDI) is the amount of money invested in different projects of the country by the foreign investors (Asiedu, 2002)…
In recent time, outward Foreign Direct investment has been significantly increased from China and India. Discuss the factors responsible for such a growth. Do you think International business theories (OLI and IDP) adequately explain the reasons for outward Foreign Direct investment?
The paper studies a number of broad ranging conceptual frameworks have been advanced that function as a means of articulating inflows of FDI. Democratic political structures have been demonstrated to be a major component of attracting foreign direct investment as such structures are more apt to stability and transparency.
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.
In the march towards been globalized, many companies have acquired great advantages by outsourcing skills and technology which is better in other countries (Ghemawat, 2011). A common practice these days is to have separated units of a company’s operation, where the designing, production and assembling are all done in different locations or in different countries, and then brought to the prime location (Click & Duening, 2005).
Eventually, countries will continue to entice high level of investment coming specifically from foreign enterprises. It is believed that trans-national firms will consider this as potentially beneficial for their operations.
Globalisation is also considered as a primary contributor to the methods used to develop foreign direct investments.
Some of these countries became full European Union (EU) members in May 2004. They also experienced a significant increase in foreign direct investment (FDI). As a consequence, the ratio of inward FDI stock to the 12 CEE countries studied here in total world inward FDI stock increased more than three-fold, from 0.81% in 1994 to 2.89% in 2004.
(Wikipedia, 2006). After the 1960's, foreign direct investments (FDI) have increased at a steady rate, with FDI stocks making up twenty percent of the world's Gross Domestic Product (GDP). Currently, China leads the world in foreign direct investments.
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.
(Barrell, 1997) But with the expansion in the economy, on one hand FDI has remained successful in providing full-fledged investment support to the East Asian countries, while on the other hand FDI has created a vacuum for the European states particularly
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
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