Discuss the rise in importance of FDI for Multinational Enterprises

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The technological innovation and the peace initiatives taken by the world leaders in the post world war period augmented the process of economic and political integration at the international level. The spurt in productivity both in goods and services and the growth in consumerism across the globe prompted the countries to liberalize their trade barriers thus inviting grater access to inputs as well as access to external potential markets.


This deepening and widening economic integration is achieved through three main channels such as trade, foreign direct investment and the international transfer of knowledge and technology. The enterprises, which have dispersed their business processes across the globe through the channel of FDI, are termed as Multinational Enterprises (MNEs). These MNEs are the main pillars in the globalized economies which involved in the world economic activities. Though trade which principally means export-import of goods and services across the geographical regions are there since many years but the concept of foreign direct investment (FDI) is rather of recent origin. Being different from portfolio investment this type of investment entails a firm to open its subsidiary in a foreign land to expand its business activities there. In today's fast moving global economy the scale of FDI made by a multinational enterprise plays a vital role for the growth of developed as well as developing countries across the world. ...
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