Foreign Direct Investment ( Fdi )

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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.

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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)

In the recent time, significant rise of outward foreign direct investment (FDI) was witnessed from developing countries like China and India. The Organisation for Economic Co-operation and Development (OECD) defines FDI as an investment that reflects the objective of establishing a lasting interest or long-term relationship by a resident enterprise in one economy (direct investor) in an enterprise (direct investment enterprise) that is resident in an economy other than that of the

Foreign direct investment (FDI) is the movement of capital across national frontiers in a manner that grants the investor control over the acquired asset. Thus it is distinct from portfolio investment

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) is the control of the operations or the ownership of domestic companies by foreign companies. It normally involves establishing operations or acquiring tangible assets.(Foreign direct investment definition from financial times lexicon, no date)

Foreign Direct Investment (FDI) is a venture made by an organization or element situated in one nation, into an organization or substance situated in an alternate nation. Outside immediate ventures vary generously from aberrant speculations, for example, portfolio streams, wherein abroad establishments put resources into values recorded on a country's stock trade. Elements making immediate ventures commonly have a huge level of impact and control over the organization into which the speculation is made. Open economies with talented workforces and great

FDI is an investment made by a company or entity based in one country, into a company or entity based in another country. Foreign direct investment is one of the most effective tools in the fight against poverty and unemployment. It is measured as the inward stock percentage of GDP.

FDI is where the MNE invests directly in production or other facilities over which it has effective control in a host economy (j &t). According to Pollan (), the definition of the terms “investment” is highly significant to Foreign Direct Investment, which can be typical comprehend as the conveyance of capital to a country. Investment can be defined as money committed or property acquired in order to gain profitable returns, as interest, future income or appreciation in value (business dictionary, 2014). The commonest definition used to understand the idea of FDI is the definition provided by International Monetary Fund’s (IMF). The IMF definition of FDI introduces systems and structures which clearly demarcates foreign direct investment from portfolio investment. According to the IMF, direct investment creates a lasting interest in an enterprise, consisting of a long-term relationship between the investor and the enterprise and that the investor has an outstanding amount of control on the management of the enterprise, while portfolio investment does not create an extended relationship and the portfolio investor is rarely directly partaking in the day-to-day management of the enterprise (Pollan,). FDI however has no comprehensive, authoritative and ubiquitous legal definition and the test for the existence of enough degree of control differs in scope depending on applicable law in a

OECD recommends that a direct investment enterprise be defined as an incorporated or unincorporated enterprise in which a foreign investor owns

On the other hand, John Dunning claimed that there are four types of FDI in terms of their motivations: resource seeking FDI, efficiency seeking FDI, market seeking FDI and strategic asset or capability seeking FDI. According to resource seeking FDI, companies invest in foreign countries with the purpose of acquiring resources of higher standard and at a smaller cost than in their own country. Examples of resources are raw materials, labor force, infrastructure (roads, telecommunication) and technological level (Dunning, 2008). As claimed by market seeking FDI, firms invest in a country with the purpose of supplying goods and services to the host country’s market. It highly depends on market size and products distribution channels. At the same time, efficiency seeking FDI has the aim to exploit greater availability and lower costs of all relevant components from foreign countries. Last, strategic asset seeking FDI is driven by the strategic goals in the long run of foreign firms such as encouraging and promoting their worldwide competitiveness or weakening their rivals (Wadhwa, 2011). If we analyse the FDI amount in Romania during 1990-2009, over 50% of it was concentrated in the secondary sector (manufacturing). So investors

It could also be stated that the Indian economy is emerging in nature and provides a greater platform for the companies to enter and establish in the same. With the help of FDI in the developing countries, the nation has been experiencing an adequate growth associated with the industrial as well as infrastructural related. It has also notified that during 1990 -2000 the concept of inward FDI has gain huge prominences regarding the development of Indian economic condition. It has also observed that post-independence Indian government has continued with the application of FDI investment scheme. In the year 1991 after the launching of New Economic Policy, the concept of FDI has gained considerable importance in Indian economy.

There is an increasing recognition when it comes to understanding the forces of economic globalization which requires looking first at foreign direct investment (FDI) by multinational corporations (MNCs); which is when a firm based in one country acquires production facilities in other countries or invests in businesses in that country for a voting share. “While real world GDP grew at a 2.5 percent annual rate and real world exports grew by 5.6 percent annually from 1986 through 1999, United Nations data show that real world FDI inflows grew by 17.7 percent over this same period” (Bernard). Bernard, Jensen, and Schott also found that ninety percent of U.S. exports and imports flow through a MNC, with around fifty percent of U.S. trade flows occurring between different affiliates of the same MNC. (Bernard)