Different Types Of Foreign Investment

Deardorff (2001) stated that, direct foreign investments refer to the particular countries and kinds of countries toward which a country's exports are sent, and from which its imports are brought, in contrast to the commodity composition of its exports and imports. Besides, direct foreign investments also can be defined as the situation in which a foreign investor owns10% or more of the ordinary shares or voting power of a local company. Thus, the pattern that the direct foreign investments follow is that of a bilateral trade.

The concept of foreign direct investment (FDI) is closely related to the definition of transnational corporation (MNE, MNC, transnational corporations). In the literature, there are several definitions describing the features that should have a firm considered as multinational enterprises.

Foreign investment is an important part of our economy. There are many benefits to foreign investment in any country. It would be very difficult or impossible today to close the doors to foreign investment. The fact is foreign investment is responsible for providing a great deal of needed capital in this country. This capital is an asset in the continuous modernization and expansion of our manufacturing and other productive facilities. Without investment in our factories and processes we would fall behind in the world market. These investments lead to increased competitiveness within the international community.

Investment abroad which can also be referred to as foreign investment is defined as the flow “of capital from one nation to another, in exchange for significant ownership stakes in domestic companies or other domestic assets. Typically, foreign investment denotes that foreigners take a somewhat active role in management as a part of their investment. Foreign investment typically works both ways, especially between countries of relatively equal economic stature.” Foreign investment is vital for all countries as it leads to economic growth and affluence. Foreign investment has positive contributions to all countries, but developing countries can experience major positive effects due to foreign investment. Canada is a country which greatly exemplifies

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

* International Investment - refers to the transfer of assets to another country or the acquisition of assets in that country. Economists refer to such assets as factors of production and they include capital, technology, managerial talent and manufacturing infrastructure.

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.

Even some changes are taking place, many tasks needed to be accomplished to construct the legal system which benefits market economy. The existing legal basis, legislation procedure and operating mechanism are not fully suitable with the requirements of market economy (Rongala, 2007 see in Tarun, 2012).

Foreign direct investment (FDI) has taken a growing and extraordinary role in international business. Foreign investment has had a positive impact on the United States’ general economic growth through the creation of employment, attraction of capital investments, and expansion of manufactured exports. It has also brought international brand names and skilled labor to the country and facilitated the transfer of technology and knowledge to the local economy. The domestic market has greatly expanded due to job creation achieved from infrastructural developments. In the U.S., the stock market is a fundamental segment of the state’s financial system that acts as a source of financing and is a key determinant in the economy of the country. It is right to argue that foreign direct investment has a positive impact on the United States’ stock market.

Although the author’s main argument is based on job creation by foreign companies in the United States, he has not failed in his article to show the grievances by the government concerning the same. He shows that too much of foreign investment is sickening and creates an imbalance in trade. For example, the author explain how Germany successfully creates multibillion-dollar

Due to the competition for jobs amongst the people, United States citizens have lost jobs to foreign workers. The foreign workers are willing to work for less money and in worse conditions. Now the American workforce has to compete with the foreign workers within companies and often they are replaced by those who are willing to work for less. Along with the competition of jobs the United States also has a major trade deficit. In order to stay a powerful nation the United States has to learn how to deal with the work and trade deficits they are being faced with. Since the overall employment impact of trade and the FDI is uncertain, it is important to pay attention to these relationships in order to function as efficiently as possible. On the one hand, some believe that both trade and the FDI should take advantage of the abundance of low-skilled labour arguing that it's ultimately a better

The topic of discussion is Expropriation. In layman’s terms this is when a host government confiscates the use or ownership of a business/investment owned by foreign investors. There are two forms of expropriation, direct and indirect and either can be seen as legal or illegal depending on the actions taken by the host state. (Nikiema, S. 2012) When a government seizes the assets illegally it is known as confiscation. (International Law) “Every state has the sovereign right to expropriate assets in its territory assuming it meets certain conditions such as: not to be discriminatory against the investor, be for a public purpose, in accordance with due process of law, and full compensation in one form or another.” (Francis, Y. 2012) In today’s global economy illegal forms of expropriation are becoming more and more prevalent.

Foreign direct investment has many forms. Broadly, foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intra-company loans".

"Foreign Direct Investment is the purchase by the investors or corporations of one country of non-financial assets in another country. This involves a flow of capital from one country to another to build a factory, purchase a business or buy real estate." (http://www.afsc.org/trade-matters/learn-about/glossary.htm).

In recent years, the investment scales of foreign business are increasing stably. In 2001, the foreign direct investment was 46.8 billion dollars. In 2005, it has arrived at 85.5 billion dollars. At the same time, the form and field has changed diversification. With the China economy high speed developing and enlarging the industry field, the foreign investment will related to communication equipment, computer, bank service, insurance service, etc. so it will also increase for a long time.