Advantages And Disadvantages Of Foreign Direct Investment

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Foreign direct investment (FDI) is the most way entered into a market of foreign country, it is because FDI is believed to be stable and easier to service than bank credit. FDI are usually on long term economic activities in which the return profit only occur when the project earns profit. As stated by Dunning and Rugman (1985), Foreign Direct Investment (FDI) contributes to the country’s gross capital formation, higher growth, industrial productivity and competitiveness and other spinoff benefits such as transfer of technology, managerial expertise, improvement in the quality of human resources and increased investment.

Foreign direct investment (FDI) has been considered as a significant source for continuous growth, enhancing exports and create jobs in developing countries. There are many developing countries try to establish an environment in order to think over all the benefit of attracting foreign investors such as South Africa. FDI can benefit a country like South Africa, not only by complementary investment but also can create jobs, transfer technology, raising competiveness and others (Xolani 2011). In year 2002, Asiedu also stated that foreign direct investment as a key element of globalization and of the world economy, is a driver of employment, technological progress, productivity improvements, and ultimately economic growth.

In Malaysia, the government extremely encourage investment from foreign investor or company in order to come up with a long term

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