The Pros And Cons Of Foreign Direct Investment

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IMF defines FDI as : “Foreign direct investment enterprise is “defined as an incorporated or unincorporated enterprise in which a foreign investor owns 10 per cent or more of the ordinary shares or voting power of an incorporated enterprise or the equivalent of an unincorporated enterprise. “The numerical guideline of ownership of 10 per cent of ordinary shares or voting stock determines the existence of a direct investment relationship. An effective voice in the management, as evidenced by an ownership of at least 10 per cent, implies that the direct investor is able to influence or participate in the management of an enterprise; it does not require absolute control by the foreign investor” (§7 and §8 OECD Benchmark Definition).” https://www.imf.org/External/NP/sta/bop/pdf/diteg20.pdf…show more content…
Where the transnational corporations are enterprises that deal with productivity and other activities outside mother land, lead by an international management team and follow an international strategy with the goal of defending stockholders interests rather than national interests. Transnational companies are the most met on an international scale using three major strategies : • Point strategy • Simple integration • Complexe integration Globalization doesn’t only manifest on an economic level, it affects culture, social life, political life as well as technology development since intergration made direct contact and exchange between countries, societies and economies. Where the population is the key influence upon national economy, it is the population who demands the level of production and its quality and at the same time it is the key factor for market development. Globalizing markets offerd population a larger variety of products as well as better quality than national products, example: • Textiles • Sports shoes • Electronics • Vehicles • Construction equipment • Financial services • Airlines •…show more content…
Exp/imp ration in Romania is 71% exports vs. 62% imports. Where exports structure changed since 2000 till present where textiles and clothing where at 35% of exports to reach 11% in 2012. Whereas for vehicules at 20% in 2000 reached 40% in 2012. GDP registered a 2.2% in 2011 and witnessed a slight decrease in 2012 to 0.7% due to slow economic growth and global financial tension, where even banks position weakened at the end of 2012 after holding a dominant position in Romania’s economy. GDP is still on positive territory in 2012 and went for a considerable improvement in 2013. Domestic macroeconomic stability, financial stability are required in order to strengthen the confidence of main stakeholders, by improving the national labour market, the absorption rate for E.U funds shall increase, technological innovation, fiscal consolidation, payment discipline. These strategies are the foundation of a governmental programme to attract foreign investors, increases profitability and GDP as

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