Pros And Cons Of FDI: What Forces Have Driven The Internationalization Of Banking

more than demand in the market, which leading to falling prices. It is favorable to consumer but a bad new for exporters.

Besides that, the worsening TOT was also caused by the technological invigoration in developed countries. In well developed countries, monetary income, prices and living standard have increased rapidly due to the advance in technology. Indirectly, the goods and machines produced by them become more expensive, which impact on the deteriorate TOT for less developed countries.

3.4 What Forces have Driven the Internationalization of Banking?

In the 1950s to 1960s, banks went for internationalization due to the proliferation in foreign investment by industrial organization. Initially, banks operated oversea in order to serve

Thus, an organization must take all the factors and impacts into consideration towards the implementation of FDI.

3.8 How has the U.S. FDI balance Changed over time? Why?

Foreign organizations invest in the U.S. to gain the route to its domestic markets and to avoid trade protectionism. FDI in the U.S. grew exponentially in the last few decades. In 1970s, the FDI was about USD 13 billion. Tremendously, in 2008, it was amounted to USD 1.6 trillion (Stutz, 2012).

The rapid growth of FDI in the U.S. over the years is astonishing. In fact, the preference of investing in the US is mainly due to its political and economic stability as well as the comparatively inexpensive U.S. currency in global market.

On the other hand, as discussed in 3.6, the trade deficits of U.S. have a cause and effect relationship to the FDI. As mentioned earlier, the trade deficit indicates the outflow of USD to other countries. This money enables foreign governments to purchase factories, land and real estates in America. Meanwhile, many firms found that the goods produced in the U.S. is more cost effective, compared to their own countries.

Consequently, foreign investment in America increased