Foreign Direct Investment Summary

1) General Information About FDI

Foreign direct investment (FDI) can be defined by saying: If an investor takes place in far from their home country with purchasing a firm in the landlord country’s border. According to “The Organization of Economic Corporation and Development (OECD)”, If a foreign investor has more the ten percent of the local company, ,this means that the foreign investor has control on the local company.

One different description suggests that, basically, a company from one country’s doing a substantial investment into structure a plant in a different nation.

Foreign Direct Investment plays an important part in global entrepreneurs and businesses. The FDI can easily provide a firm with new business environments and markets,

That partnership was thought as an opportunity to grow for that company mentioned.

One professor suggests three general advantages of FDI on capital, these are ; 1)company presidents have less risk with the help of free flow of capital around the world. With the different financial instruments, president can distribute the risk. 2) If the money and capital markets become worldwide, that situation increase the quality of capital and money governance and management, gathers more modern regulations. 3) With the integration to international system of capital flowing, country’s governments must have some limit to make bad policies. 2.1.2)

- The money and capital generated by the FDI will not be staying in the landlord country’s account forever. Eventually the MNE which invested on landlord country, will take their money and takes their home nation.

- If a foreign group member country imports great amount of production from abroad, the figures will take place on landlord country’s debit account in balance of payments accounts. 3.3) Does the FDI cause loses in national independence?

National sovereignty problems are caused by the having too much power for a foreign multi national enterprise. Some argue that a foreign multi national enterprise with great amount of economic and governmental power would be too active on the landlord nation’s internal businesses. Some take this idea forward with saying that If a county lets a multi national enterprise to have too much power and also be monopol in an sector, that company can be depend on the MNE’s country mediately.

For example, If a country’s monopol natural gas provider were foreign, in an conflict situation between MNE’s country and landlord company, that MNE can cut the natural gas