Foreign Direct Investment

In principal, foreign direct investment is usually considered the most desirable form of capital inflows for developing countries. It directly adds capital stocks to host countries, and therefore contributes to investment and growth in host countries through various channels

This essay will give a general introduction about the location choice of foreign direct investment (FDI). After that, it will focus on

This phenomenal change in the international environment in which business is conducted has resulted in increased levels of foreign direct investment by companies from developed countries in lesser developed economies such as the Third World as economic benefits were sought through the globalization of production as well as markets. (Hill 2011, p.5)

Foreign direct investment (FDI) is an investment made by a company or individual in one country in business interests in another country, in the form of either establishing business operations or acquiring business assets in the other country, such as ownership or controlling interest in a foreign company. Foreign direct investments are distinguished from portfolio investments in which an investor merely purchases equities of foreign-based companies. The key feature of foreign direct investment is that it is an investment made that establishes either effective control of, or at least substantial influence over, the decision making of a foreign business.

Foreign direct investment (FDI) can be defined as a process whereby residents of one country (the source country) acquire ownership of assets for the purpose of controlling the production, distributions and other activities of a firm in another country (the host country). FDI also have another definition like ‘an investment that is made to acquire a lasting interest in an enterprise operating in an economy other than that of the investor, the investor’s purpose being to have an effective voice in the management of the enterprise’- International Monetary Fund’s Balance of Payment Manual and ‘ an investment involving a long-term relationship and reflecting a lasting interest and control of a resident entity in one economy (foreign

Foreign direct investment (FDI) is investment that gains control of the foreign business or assets. It is a method of international expansion that gets a controlling interest in property, assets or companies located in other countries. FDI can also involve a business controlling resources such as mineral deposits, land and other assets in other countries. This form international expansion involves a higher level of commitment by the business because it usually involves a transfer of money, personnel and technology.

Several sources (Aswathappa, 2012; Jensen, 2012) have identified FDI as an investment, made by a company based in one country (home country) into another company, which is based in other country (host country), in order to obtain certain degree of management control over that company.

For a country to be involved in Foreign Direct Investment (FDI) means that their resources participate in another countries business. Both people and technology can have an involvement in being transferred between two countries for the process of FDI. This is established by an investor which can be anything from a government body, a company or even an individual. When looking deeper into FDI over recent years (from 1980 onwards) patterns begin to develop globally and the financial crises tend to have a huge impact on FDI inflows in both developed and developing economies.

For many years FDI has allowed lots of externalities such as displacement of general knowledge, level elevation in industrilization, important technology change in production and distribution, workforce development. Host country's competitiveness increase by FDI's services. Cause when a country get FDI inflow that means the country attract new capital so its productivity increase. If FDI would be productive then the capital that coming the country will be stable and long lasting. With the competition brought by FDI, in the host country's companies effected very efficially from this. They tend to become more productive and they would be more powerful againts abroad competitor. In a country when the companies has strong productivity, then the growth ratio in that country is higher than others. ( Baracaldo (2005)). With the FDI inflow of country, the employment generation will increase in that country. When the country's productivity increase, employment ratio will increase and its competitiveness increase, too. FDI contribute to the spillover of technology and improve knowledge. FDI make them efficient and with this way productivity increase(Ramírez (2006)). Also, FDI allow bring new goods and services in host country.

Foreign Direct Investment is the direct investment in new facilities or companies to expand a business in a new country. In evaluating and analyzing East Asia, it is important to focus on cultural issues as they are major indicators of the business environment and implementation in a given local. East Asia, including China, only began opening up for foreign investment in the 1970s. Japan is considered a developing market, where the rest of Eastern Asia is an emerging market, the majority of FDI around the world is targeted to developing nations due to increased stability, consumer culture, and large markets. The risk of emerging markets is greater than in developed, thus yielding a greater return on investment when the endeavor succeeds.

Ekpo, A.H. (1995) investigated that the element like higher gain from investment, low labor and production cost, political stability, enduring investment climate, official infrastructure facilities and helpful regulatory atmosphere also serve to invite and guard FDI in the host country.Chadee and Schlichting (1997) investigated some of the aspects of FDI in the

There is a long standing belief that foreign direct investment (FDI) inflows help the countries to have the opportunity to make further improvements on their economies. In recent decade, this belief strengthened by the fact that faster growing economies tend to attract more FDIs. Even if the direction of causality between FDI and growth is not absolute yet, positive impacts of FDI such as new technology, know-how or creating employment are enough attractive for policymakers. Consequently, investigating factors that pull FDI into country became a crucial topic in the literature.

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.

Many writers have tried to figure out if there is a direct link between Foreign direct investment (FDI) and economic growth of an economy in terms of Gross domestic product (GDP) but a reliable procedure hasn’t been found yet.

In this context the aim of this paper was to find out the determinants, impediments, favorable environment and potential of FDI for Bangladesh. Less developed infrastructure of Bangladesh is vital problem for FDI inflows. The trend of foreign investors goes in infrastructural investment such as electricity, fuel, air and sea communication.