For growing economies, Foreign Direct Investment (FDI) has momentous advantages over equity and debt capital flows. Most of the foreign firms that start their conduct of business in other countries, they not only come with capital but transfer modern technology, promote human capital by training the host country’s employees according to the change of technology to those countries, and this is the key for the development of the host country.
According to author Direct Investment replicates aspire of acquiring an enduring awareness by an inhabitant body of one economy that is the direct investor in a venture that is occupier in another economy which is called the direct investment enterprise. The “lasting interest” entails the continuation of a long-term relationship between the direct investor and the direct investment enterprise and an important level of authority on the management of the latter.
Direct investment involves both the initial transaction instituting the relationship between the investor and the enterprise and all succeeding capital transactions between them and among affiliated enterprises; both incorporated and unincorporated (Duce & Espana, 2003).
Author described that Foreign Direct Investment is considered as a growth enhancing factor for the developing countries. FDI can enhance the growth through different ways in the host country, one of those ways transfer of technology is the most important mean. Through this transfer of technology the interaction between the multinational firms and domestic firms increases that leads to the combined effort towards the economic growth. Technology should be interpreted as product, process, distribution, management, marketing (Khan, 2007).
In this manner different peo...
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...h and so on, in order to provide better employment opportunities for educated and skilled people so that they can play a vital role in the productivity and modernizing the economy. Due to the modernized economy the living standard of people of the country raised because the level of domestic saving increased and helped in capital formation. According to the author there are three primary components upon which Pakistan’s foreign investment regime relies, these are regulatory, economic and socio political. The regulatory regime of the Pakistan is considered moderate in the case of privatization and deregulation. In order to protect Foreign Investors the regulatory framework for foreign investment consists of three laws such as Foreign Private Investment Act 1992, Furtherance and Protection of Economic Reforms Act 1992, and Foreign Currency Accounts Ordinance 2001.
Sweeney, M. (2010). Foreign direct investment in India and China: The creation of a balanced regime in a globalized economy. Cornell International Law Journal, 43, 207-248. Retrieved from http://www.lawschool.cornell.edu/research/ilj/upload/sweeney.pdf
...itten the full word Foreign direct investment and then in the brackets he has put the abbreviation (FDI).
Since foreign aid programs are here to stay, it is important to focus on the enormous potential for foreign aid to be effective. One such way is through augmenting a state’s ability to attract foreign direct investment (FDI). FDI is a good option because it has the potential to be a more long-term solution than pub...
...irect control of foreign interests, absolute and comparative advantages and sometimes the strength of ties with major foreign markets. The problem of geographic and economic distance is one that is not solved easily. There must be a cross-border trade in goods and services and this could be done with little direct involvement abroad. Businesses may also be able to systematically work local markets abroad by establishing branch offices in the given country. There is also the option of investing in an existing firm abroad, which minimises the risk involved. Ideally, investor motives will broadly match the requirements of target countries or firms, with the interests of the latter focusing on expanding production capacities, enhancing productivity growth, benefiting from employment opportunities and getting access to technological know-how (A. Breitenfellner, 2008).
Magee, S. P. (1977). Multinational corporations, the industry technology cycle and development. Journal of World Trade, 11(4), 297-321.
Yan, A. and Luo, Y. (2001), International Joint Ventures: Theory and Practice. (New York and London: M.E. Sharpe, Inc.).
Due to the sudden collapse of the world’s economy in 2008 M&A became an unfavourable method of FDI and in just one year IFDI into UK shrank by 50%. The trend continued up to 2011, as the FDI pattern moved towards investments into third world countries and developing nations. This enormous change in the FDI graph after the financial crisis is mainly due to a decline in investments from transnational corporations that are located in the European Union. As the world’s economy has...
Political and legal considerations were given first priority in this analysis with primary emphasis given to whether a country's legal or political system prohibits or impedes foreign investment. If a country's political or legal system discouraged or prevented foreign investment, that country was disqualified from further consideration. Factors considered when assessing the political and legal environment:
Incorporation of SMEs and International companies to better define, penetrate and gain access to both local and international
In the year 2007, China and India ranked first and second respectively in the list of ideal foreign direct investment (FDI) destinations, according to A T Kearney, a global strategic management consulting firm (The Press Trust of India Limited, 2007a). The two nations, because of their similarities in geopolitical, economic and demographic aspects, are often compared with each other. To determine which one is more attractive for businesses to expand to, this essay will examine the business environment of both countries from the following perspectives: political/legal, economic, socio-cultural and technological.
Woodward, D. (2001). The next crisis?: Direct and equity investment in developing countries. London: Zed Books.
An increasing number of countries are encouraging investments with specific guidelines toward economic goals. MNCs may be expected to create local employment, transfer technology, generate export sales, stimulate growth and development of the local industry.
Tallman, S., & Shenkar, O. (2004). International Cooperative Ventures Strategies: Outward Investment and Small Firms from NICs. Management International Review. Vol. 39 (5), 299-315.
Sukar, A., Ahmed, S., & Hassan, S. (n.d.). THE EFFECTS OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH. Southwestern Economic Review.
Last accessed on 4 April 2005 at URL: http://www.cc.jyu.fi/~ullahlf/IntlMktg/ForeignDirectInvestmentInDigitalEcon.pdf