Preview

FDI

Good Essays
Open Document
Open Document
1227 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
FDI
FDI

 Have an understanding of the patterns and distribution of FDI flows in the global economy
 Have an understanding of the major explanations of determinants of FDI and the reasons for the resurgence of FDI in the global economy after 1985
 have an awareness of the role of multinationals in improving competitiveness of domestic firms and other impacts of FDI
 Have an awareness of role of FDI promotional policies

A Foreign direct investment (FDI) is a controlling ownership in a business enterprise in one country by an entity based in another country. Foreign direct investment (FDI) is a key element in international economic integration.
It creates direct, stable and long-lasting links between economies. It encourages the transfer of technology and know-how between countries, and allows the host economy to promote its products more widely in international markets. FDI is also an additional source of funding for investment and, under the right policy environment, it can be an important vehicle for development.

Decline in Manufacturing in TRIAD and its shift to Non-Triad
M&A emerge as major form of FDI. M&A Activity –rising again after financial crisis

Have an understanding of the major explanations of determinants of FDI and the reasons for the resurgence of FDI in the global economy after 1985 theories of determinants FDI Dunning's OLI theory are the most important determinants of attraction to FDI.
(1) Make the best of firm-specific (ownership) competitive advantage. It represent all the advantages of owning a producing unit in a host country versus selling the goods and services in the market or selling the license to some economic unit in the host country
management finance marketing technology (patents)
brand name ( Coca Cola – MacD – CK- Nike)
vertical integration - control over resources and markets
(2) Make the best of location-specific advantages (for being there) that represent specifics regarding inputs that exist in a

You May Also Find These Documents Helpful

  • Powerful Essays

    The integration of the global economy has strengthened the international integration of goods, technology, labour and capital. This process of cross-border restrictions eliminations on international capital flows has increased the growth of foreign direct investment (FDI) activity. Many countries make every effort to attract FDI because it will bring a substantial growth to their economy, in addition to its function as the principal vehicle of international capital movement.…

    • 3528 Words
    • 15 Pages
    Powerful Essays
  • Powerful Essays

    Power Trip

    • 2131 Words
    • 9 Pages

    1. The concept of Foreign Direct Investment refers to the practice of a company from one particular company making physical investments in another country either through acquisitions or purchase of physical machinery, buildings and/or equipment. (Graham & Spaulding, 2005) Over the past decade alone FDI has placed a major role in the globalization of business and is seen largely in developing countries rising from 481 billion in 1998 to 636 billion last year. (UNCTAD) Since the end of WWII the definition of FDI has expanded and evolved into what we see today and thus has allowed for the globalization of industries into unforeseen markets and the establishment of relationships that have added in foreign trades etc. (Bureau of Economic Analysis)…

    • 2131 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    FDI tends to increase in the current decade. According to the recent data the amount of FDI in different countries is considerable. Firms throughout the world are interested in FDI…

    • 9956 Words
    • 40 Pages
    Powerful Essays
  • Powerful Essays

    Ib Coca Cola

    • 2931 Words
    • 12 Pages

    As we discussed on the FDI, the most important is that to understand on how to distinguish between the flow of FDI and the stock of FDI. Thus, the flow of FDI is that refers to the amount of FDI undertaken over a given time period (normally a year). Secondly, we should also to understand on the stock of FDI that refers to the total accumulated value of foreign-owned assets at a given time. Further to these, we should look into outflow of FDI, meaning the flow of FDI out of a country, and inflow of FDI, the flow of FDI into a country.…

    • 2931 Words
    • 12 Pages
    Powerful Essays
  • Powerful Essays

    Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing…

    • 2041 Words
    • 9 Pages
    Powerful Essays
  • Powerful Essays

    Fdi in the United States

    • 1275 Words
    • 6 Pages

    The United States is the largest destination of foreign direct investment (FDI). This article analyse the reason why the United States is so attractive to foreign investors. The analysis can be divided into two parts. In the first part, the author discusses the open economy of the United States in the global environment. The political and economic environment enables the United States to absorb large amount of FDI. The second part focuses on domestic level. The United States is the third largest country in both size and population. It also has rich natural resources, and occupies 27% of the world’s coal reservation. The huge domestic market enables the United States to attract and digest FDI. Another important factor of FDI flows is the financial markets of the United States. At the end of the article, the author discusses the challenges the United States faced especially after the Global Financial Crisis (GFC).…

    • 1275 Words
    • 6 Pages
    Powerful Essays
  • Better Essays

    Cemex Case Study

    • 1409 Words
    • 6 Pages

    References: Graham, J. P. (2005, June 18). Understanding Foreign Direct Investment (FDI). Retrieved July 24, 2009, from Going Global: http://www.going-global.com/articles/understanding_foreign_direct_investment.htm…

    • 1409 Words
    • 6 Pages
    Better Essays
  • Powerful Essays

    Foreign direct investment (FDI) has grown dramatically as a major form of international capital transfer over the past decade. Between 1980 and 1990,world flows of FDI-defined as cross-border expenditures to acquire or expandcorporate control of productive assets-have approximately tripled. FDI has become a major form of net international borrowing for Japan and the United States (the world’s largest international lender and borrower, respectively). Direct investment has grown even more rapidly of late within Europe. To what extent is this sudden worldwide surge in FDI explained by traditional theories? These theories predict the scale and scope of multinational enterprises by looking to differences in competitive advantage, across firms or countries, that might lead to the extension of corporate control across borders. So, for example, better technology, management capability, and product design; stronger consumer allegiance; and greater complementarities in production or use of technology can allow a domestic firm to control foreign assets more productively than would a foreign firm and could therefore predicate direct investment. In many cases, these theories also explain why an enterprise’s alternatives to FDI-domestically based production or licensing of foreign-based production-are less efficient than direct control of foreign based operations (see, e.g., Caves 1982; Vernon 1966).Traditional theories are very useful for explaining basic long-term patterns of FDI. For example, they help understand the behavior of U.S. firms during the post-World War I1 period (the experience on which these theories were honed). At that time, advanced U.S. firms were superior in technology and well established in foreign markets. U.S. firms tended to move overseas to retain competitive access (or to preempt competitors’ access) to those markets and, in the process, met with relatively little competition. These theories also help us understand why the tide of U.S.…

    • 3839 Words
    • 16 Pages
    Powerful Essays
  • Powerful Essays

    The aim of the paper is to analyse that FDI inflows have a positive effect on host country economic growth. When I examine the previous paper, I conclude mixed results so this paper includes the mixed results of earlier research and most of them finding that FDI inflows have a positive effect on host country economic growth in developing but not in developed economies.…

    • 5292 Words
    • 22 Pages
    Powerful Essays
  • Powerful Essays

    Fdi in Bangladesh

    • 4002 Words
    • 17 Pages

    Arguments supporting FDI in developing countries suggest that recipient countries need to fulfill some preconditions to create a favorable business environment. It has certain advantages to both the host country and the investor. Host countries’ macroeconomic policy, tax regime, regulatory practices are critical determinants for attracting FDI. The foreign investors are also benefited by penetrating a market, gaining access to raw materials, diversifying business activity, better rationalizing production processes and overcoming some exporting drawbacks, like trade barriers and transport costs. Internal factors of host countries are important determinants for attracting FDI. Host country location related factors that mainly comprise of natural resources, cheap labor, proximity to markets and political,…

    • 4002 Words
    • 17 Pages
    Powerful Essays
  • Good Essays

    FDI is considered beneficial in view of its contribution to technological transfers, enhancement of managerial capability and new opportunities for market access. FDI, particularly in the form of equity investment, adds to the capital stock of the country and thus enables the recipient country to achieve faster economic growth through momentum in capital formation. Increases in FDI are also seen as leading to increases in exports by creating international markets through new marketing and organizational skills.…

    • 1101 Words
    • 5 Pages
    Good Essays
  • Satisfactory Essays

    literature in the field of FDI after 1990, in Romania, as well as some specific…

    • 5414 Words
    • 22 Pages
    Satisfactory Essays
  • Good Essays

    Fdi and Indian Stock Market

    • 5799 Words
    • 24 Pages

    r epresentative o f s tock m ar k et a s t hey a re t he…

    • 5799 Words
    • 24 Pages
    Good Essays
  • Powerful Essays

    Fdi Introduction and History

    • 3378 Words
    • 14 Pages

    Over the past two decades, many countries around the world have experienced substantial growth in their economies, with even faster growth in international transactions, especially in the form of foreign direct investment (FDI). The share of net FDI in world GDP has grown five-fold through the eighties and the nineties, making the causes and consequences of FDI and economic growth a subject of ever-growing interest. This report attempts to make a contribution in this context, by analyzing the existence and nature of causalities, if any, between FDI and economic growth. It uses as its focal point India, where growth of economic activities and FDI has been one of the most pronounced.…

    • 3378 Words
    • 14 Pages
    Powerful Essays
  • Powerful Essays

    hci essay

    • 3211 Words
    • 13 Pages

    References: Bank of Albania (2010), ‘Foreign Direct Investments in Albania by ownership’. URL:http://www.bankofalbania.org/web/Statistika_Hyrje_230_1.php?evn=agregate_parent_sel&evb=agregate&Cgroups=27&periudha_id=5 , access date: 26.04.2012.…

    • 3211 Words
    • 13 Pages
    Powerful Essays