Foreign Direct Investment (FDI) is referred to, as when an investor not only finances a project or enterprise, in a specific country but is also directly involved in the management of it. FDI has been significantly rising worldwide since 1990, increasing from $207.5 billion (16.8%) to $1524.4 (51%) billion in 2011 (Sesric, 2013).
This could be as a result of the increasing favourable policies which are directly targeted to FDI in most countries, such as the reduction in trade tariffs and the making of certain currencies convertible, as well as the liberalisation of the businesses environment (IFC & FIAS, 1997). FDI is also seen as a major enhancer in the economic growth of some countries, in which they strive to promote and increase it. This may explain the reason why Singapore received $56.7 billion worth of FDI in 2012 (CogitASIA Staff, 2013).
FDI has also aided the growth of globalisation as more than half of FDI’s take place in developing countries, increasing the global integration process by linking markets for labour and capital and also by helping to increase the productivity in various countries (IFC & FIAS, 1997). For example, between 2011 and 2012, FDI in the Philippines had increased 185% (CogitASIA Staff, 2013).
This was mainly because of their strong macroeconomic fundamentals, in which it attracted some foreign investors who are concerned about the Euro crisis that affects most of the western developed countries. Also, the Philippines have a fast growing BPO (business process outsourcing) industry, as well as their rich land resources, attracting British investors to potentially invest in renewable energy (Lowe, 2013).
However, there are various other determinants that influence how much FDI a country receives. S...
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