Foreign Direct Investment ( Fdi ) Essay

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Foreign Direct Investment (FDI) is defined as an investment made by individuals 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. The key feature of foreign direct investment is that it is an investment that establishes either a majority of control or an influence on the decision making of a business. Based on the graph below, Chile has a foreign direct investment growth of over 18% of GDP growth based on the years of 2010 and 2012. Since 2010, around 30% of the increase is based on the average investment of FDI. Based on Santander Banks, companies in Chile with overseas shareholders pay wages that are on average 130% higher than locally-owned companies of the same size in the same sector. The countries in 2013 with the highest foreign direct investments in Chile are the United States with 16.7 %, the Netherlands with 14.8%, Spain with 10.4%, Canada with 5.1%, the UK with 4.3 %, Japan with 3.8 % , Bermuda with 2.9 %, Brazil with 2.7 % , and Luxembourg with a low of 2.2%. Chile’s main investments are mining 44.9 %, services 17.6 %, electricity, gas and water 10.2 %, manufacturing 4.7 %, transportation and communications 3.4 %, trade 1.2%, construction 1.0 % and agriculture and fishing 0.2%. Chile’s old FDI rule was the DL600, the new FDI rule is the IED Act, which became effective on January 1, 2016.

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