Advantages And Disadvantages Of Bits

Foreign direct investment FDI is an investment of a company from one country to another whereby assets are acquired, operations are set up and joint ventures with local firms are made (Financial Times , n.d.). FDI is a risky and more expensive method of venturing globally as compared to licensing and exporting, however it does not stop companies from doing so due to its many advantages. FDI is one of the key drivers in speeding up the development and economic growth in Malaysia. Sound macroeconomic management, presence of a well-functioning financial system and sustained economic growth has made Malaysia an attractive country for FDI. Moreover, FDI plays a crucial role in Malaysia economy as it generates economic growth by increasing capital formation through the expansion of production capacity.

The mainstream economic argument in favor of FDI is the existence of positive spillovers. It is argued that domestic companies benefit from the information and knowledge about advanced technology, marketing and management techniques that MNCs bring into the host country. Spillovers may occur through various channels, such as the movement of employees from MNCs to domestic companies and the technical support of MNCs to domestic suppliers.

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.

Over the year’s organizations from, all parts of the world have experienced growth in the areas of business. Much of this growth is in part due to multinational companies, many of them enjoying significant benefits. One such area is investment, however it creates benefits for foreign MNCs, and it brings about concern. Perhaps the greatest fear. Fear concerning state owned corporations and the lack of effectiveness of legislation / regulatory enforcement.

As well as the direct impact on employment and wider economic benefits of FDI as follows:

The benefits brought by FDI to China are apparent. Economy is influenced by FDI in a number of ways. FDI involves transfer knowledge in the host country, which will create an increase on the existing stock of knowledge through labor training, the transfer of skills, and the transferring of new managerial and organizational experience. Also, it can help local corporations to access to advanced technology by capital accumulation in host countries (Mello, 1999 and Mello, 1997). Furthermore, FDI may allow China to develop in technology and knowledge which are not readily available locally, as a consequent increase productivity growth through the economy (Jose, 2003).

In theory, the liberalization of FDI not only should benefit foreign investors, but also should help domestic economies share in the wealth derived from foreign investment. FDI, as a means of generating domestic revenue, may also serve as an effective means by which to redeploy those revenues into a nation's economic, social, and political infrastructures. "^^ Insofar as states restrict FDI in protectecl sectors, they may encourage it in less protected sectors.

ISDS has recently become a primary topic of controversy during the signing of Transatlantic Trade and Investment Partnership (TTIP) and other bilateral trade agreements. Some individuals argue that the focus on ISDS is either illegal, pointless and does not affect the pipeline of Foreign Direct Investment (FDI) in a country. Also, it is a “raw deal” that allows MNCs to contest host country’s public

On the contrary, for developing countries FDI can be a big aid to boost their economy and to increase the level of

Foreign direct investment by multinational corporations is the action of obtaining controlling equity share of a firm in a foreign country. There has been many discussions about the role of FDI in affecting a country’s unemployment rate and economic growth. Of which many believed

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)

Miao Wang (2010), “Foreign direct investment and domestic investment in the host country: evidence from panel study”, Applied Economics, 42, pp. 3711-3721 [Online] Available at: http://ehis.ebscohost.com.ezproxy.liv.ac.uk/eds/detail?vid=4&hid=3&sid=d270c6f2-d2fd-483c-8224-564af5d207e7%40sessionmgr110&bdata=JnNpdGU9ZWRzLWxpdmUmc2NvcGU9c2l0ZQ%3d%3d# (Accessed on 13 November 2012)

Many lessons were learned from the aftermath of 2008 global economic and financial crisis. One of them was the effect that foreign direct investments (FDI) had on the global economy, particularly on developing countries.

One of the primary benefits of foreign direct investment is that it helps the developing country. When a large corporation pours millions or billions of dollars into building part of its business in that country, it can significantly stimulate the local economy. This helps other businesses in the surrounding

o An increase in the country’s economy with a shift from secondary to tertiary industry which becomes less dependent on FDI.