Foreign Direct Investment Advantages And Disadvantages

According to Eryigit (2012), “Foreign direct investment (FDI) is defined as establishing a new company or branch of a foreign company by foreign investor or share acquisitions of a company established in host country (any percentage of shares acquired outside the stock exchange or 10 percent or more of the shares or voting power of a company acquired through the stock exchange”. According to Fadli, Norazidah, Rhaudhah, Nurul, Salwani and Kamaruzaman (2011), stated that Malaysia one of the developing country that being openness to foreign country in order to attract foreign investor to maintain an accelerate growth to this country. They also stated that foreign direct investment plays an important role in capital formulation and economy growth

Figure 1.7 The structure of the dissertation Figure2.2 Modes of entering foreign markets Table 2.32 Factors affecting the FDI decision Figure 2.33 Types of FDI 12 15 19 22

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)

The research this material accounts for mainly focuses on the pros and cons of FDI regarding corporations more than host countries, like what are the factors that attract multinational’s investment, what are the risk of expropriation, the extent of the development of stock markets, and what is the linkage between democracy and foreign investment (Bekaert, Harvey, & Lundblad, 2011; Busse & Hefeker, 2007; Eichengreen et al., 2011; Li, 2009). Indeed, this specific research tells little about the host countries in this international flux of investment rather than distinguishing between developed and less-developed countries (LDCs).

Foreign Direct Investment refers to the type of investment into a country that is characterized by the inflow of funds from a foreign source that can be in the form of ownership such as stocks, bonds, infrastructural presence, etc. by the element of ‘control’. FDI is defined as the net inflows of investment to acquire a management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.

FDI in a developing economy means the development of the entire national economy on a grand scale, benefiting several other support industries, development of the country 's infrastructure, raising standards of living and increasing per capita income. World-leading manufacturers on

FDI is understood as capital investments in real assets (production) in other countries, which participates in the management of the investor.

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 can have many problems and benefits, a problem with many FDI’s is that its done in the deveoped countries rather than the countries that need FDI plan such as Nigera, Cameroon and Somalia meanwhile when an FDI project is planned in a country and on a large scale then its very benefecial for the countries economy According to data.worldbank.org Foriegn direct investment means that the invester

The factors involved in process of economic growth of nations have transformed overtime, from savings to trade, foreign investment and human capital base of the country. With opening up of the economies and the formation of multiple agreements among the countries, trade and FDI have become the major medium of accord among the economies. There has been surge in FDI inflows ever since the countries adopted liberalisation policies across the globe. The countries have been looking for policies to attract more FDI by boosting investment climate in their countries, to finance their process of growth and development.

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.

Foreign Direct Investment (FDI) refers to the investment made by an investor from a country to buy controlling shares of a business in another country. When an investor buys stocks and bonds in a country, it is referred to as portfolio investment. Unlike other passive investments, FDI is a direct form of investment in which the investor has to have the control of the ownership. FDI is seen

Foreign Direct Investment is investment involving a long-term relationship and lasting interest in and control by a resident entity in one economy in an enterprise resident in another economy. In FDI, the investor exerts significant influence on the management of the enterprise resident in the other economy.

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.

Foreign direct investment (FDI) in its classic form is defined as a company from one country making a physical investment into building a factory in another country. It is the establishment of an enterprise by a foreigner. More specifically, foreign direct investment is a cross-border corporate governance mechanism through which a company obtains productive assets in another country .Its definition can be extended to include investments made to acquire lasting interest in enterprises operating outside of the economy of the investor.