The Advantages And Disadvantages Of Foreign Direct Investment

Countries would participate in foreign direct investments because it helps in the economic development of the country where the investment is being made. They also engage in FDI to reduce production costs.

The United States is both the world’s largest foreign direct investor and the largest beneficiary of foreign direct investment. While there may be many positive advantages to foreign investments, such as: increased productivity and economic development simulation, there are and equal amount, if not more, disadvantages. Direct foreign investments cause less domestic investments to occur within the United States and they could possibly even lead to Modern-Day Economic Colonialism. The United States Foreign Policy is a guideline that limits and allows overseas trade within the country. It is used to as a form of security to protect the United States' well-being, to make sure that trade with other countries and organizations won't jeopardize the

Many governments, especially in industrialized and developed nations, pay very close attention to foreign direct investment because the investment flows into and out of their economies can and does have a significant impact.

FDI allows the home country to invest into the host country to produce, advertise, and distribute products, in order to upsurge their market share and provides a long-term investment and enhancement. (Moosa, 2002)

Investments can be categorized as Foreign Direct Investment (FDI) and Foreign Indirect Investment (FII), where Foreign Direct Investment is venturing into an economic activity outside the economy of the investor. It is referred to as Direct Investment because the investor whether as a person or as a company has a direct long term interest in another country's company either through purchase or building and getting involved in the management and control of the operations. An investment qualifies as an FDI when the investor has acquired the voting rights by obtaining 10% of the issuer's common stock.

There is no doubt that foreign direct investment (FDI) can do a lot of good for a country, for instance it can add to an economy’s productive capacity and import not just capital but technology, production skills and better management. Multinational Corporation (MNC) is a large corporation which produces or sells goods or services in various countries. MNCs often seek out developing countries in order to set up a branch of their corporation in that host country and they do this to seek out several benefits. One benefit is that the MNC can bring their product to a new market that may not have previously had it. Another reason to produce goods in a country that is not its home country is primarily because; in developing countries the MNC can

Foreign Direct Investment (FDI) refers to an investment made by a firm or entity based in one country into a firm or entity based in another country. The investing firm may make its overseas investment in many forms, like mergers and acquisition or building new facilities in overseas (Hannon & Reddy, 2012). Thus, FDI have been a significant driver of economic development in China since the start of the Reform and Opening Policy in 1978 – 1979. Since the start of the reforms, China has begun to integrate more into global economy via trade and investment and become one of the most attractive economies for FDI flows from investors all over the world. According to the UNCTAD, China has exceeded the United

The world is becoming a global village from the rapid introduction of technology; there should be a need to understand the relationship between foreign investors and the economy. Foreign investors and its impact on the economic growth of a country cannot be over emphasized. A way by which it affects the economy is through the foreign direct investment. Foreign direct investment is defined not only as the transfer of money, but also a mixture of financial and intangible assets such as technology, managerial capability, marketing skills, and other assets (Nahide & Badri, 2014). In various economies they have regulations guiding the actions of foreign investors, but their impact are still felt on the economy, especially the developing countries. It assists in creating employment opportunities as well as improving the Gross Domestic Product (GDP) of the economy. Recently, there has been an increased attention to foreign direct investment; this proves the fact that it’s seen as the main factor of economic growth (Camelia, 2013). Despite the barrier to foreign investment, it has a positive impact on the economic growth of a country.

FDI is where the MNE invests directly in production or other facilities over which it has effective control in a host economy (j &t). According to Pollan (), the definition of the terms “investment” is highly significant to Foreign Direct Investment, which can be typical comprehend as the conveyance of capital to a country. Investment can be defined as money committed or property acquired in order to gain profitable returns, as interest, future income or appreciation in value (business dictionary, 2014). The commonest definition used to understand the idea of FDI is the definition provided by International Monetary Fund’s (IMF). The IMF definition of FDI introduces systems and structures which clearly demarcates foreign direct investment from portfolio investment. According to the IMF, direct investment creates a lasting interest in an enterprise, consisting of a long-term relationship between the investor and the enterprise and that the investor has an outstanding amount of control on the management of the enterprise, while portfolio investment does not create an extended relationship and the portfolio investor is rarely directly partaking in the day-to-day management of the enterprise (Pollan,). FDI however has no comprehensive, authoritative and ubiquitous legal definition and the test for the existence of enough degree of control differs in scope depending on applicable law in a

Economists believe that Foreign Direct Investments is an essential part of economic evolution in every country. There are many academic papers that attempt to assess FDI aspects. Despite many researchers have tried to give an accurate explanation to FDI, there is no comprehensively approved theory. FDI motivations have been mainly researched by John Dunning, Stephen Hymer, Raymond Vernon, etc.

Foreign Direct Investment is investment involving a long-term relationship and lasting interest in and control by a resident entity in one economy in an enterprise resident in another economy. In FDI, the investor exerts significant influence on the management of the enterprise resident in the other economy.

The advent of globalisation has influenced the scope of economic growth for countries in a rapid manner. It has also notified that with globalisation, the business sector has been able to experience considerable benefits from international domain. The concept of Foreign Direct Investment (FDI) has been gain huge prominences in the recent years for getting considerable benefits for the economy and overall development of a nation. The importance of FDI has been attaining huge prominences among the economic as well as business domain. FDI is one kind of investment that influences the overall economic functioning within a country. FDI is mainly accompanied by multinational companies (MNCs)

Foreign Direct Investment (FDI) refers to ownership of physical productive assets in the recipient country. It can be seen as the sum of the following components;

Foreign Direct Investment (FDI) is the control of the operations or the ownership of domestic companies by foreign companies. It normally involves establishing operations or acquiring tangible assets.(Foreign direct investment definition from financial times lexicon, no date)

Foreign Direct Investment is the investment of a country domestic assets into foreign structures, equipment and organizations, but does not include investment into stock markets. Foreign direct investment reflects the objective of obtaining a lasting interest by a resident entity in one economy (direct investor) in an entity resident in an economy other than that of the investor (direct investment enterprise). The lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the management of the enterprise. Direct investment involves both the initial transaction between the two entities and all subsequent capital transactions between them and among affiliated enterprises, both incorporated and unincorporated.