Fdi - International Business

1. Define

It is true that globalization has rapid expansion through national borders and several industries. The foreign direct investment is considered as one of the most significant economical figures and it is associated with business enterprise and benefits that will greatly help you in attaining your business goals in just a short period of time. It plays an extraordinary and growing role in global business. FDI occurs when a firm invests directly in facilities to produce or market a product in a foreign country. This is especially important for developing and emerging market countries. FDI from investors in developed areas like the European Union (EU) and the United States provide funding and expertise to help smaller companies in these emerging markets to expand and increase international sales. Countries are trying to attract FDI, because they usually bring new technology, better organization of work and management, causing falling costs and prices of their products and services.

1. Example

Ford and General Motors Factories - These two auto giants have foreign investments in dozens of countries all over the world. They have opened up factories and invested in machinery to produce vehicles in countries such as Brazil, Mexico, Vietnam, South Korea, and India. By investing in these other countries, they are able to increase their production, often save on labour costs, and can directly enter a market where they are looking to sell more vehicles.

1. Ads

Foreign direct investment has many advantages for both the investors and the recipients.

• Host-country benefits

The main opportunities of FDI for a host country arise from resource-transfer effects, employment effects, balance of payments effects and effects on competition and economic growth

• Resource-transfer effects

FDI can make a positive contribution to a host economy by supplying capital, technology and management resources that can boost country’s economic growth rate. With regard to capital, global multinational enterprises have access to financial resources not available to host-country firms. They can also incorporate the latest technology, innovations in operational practices, and new financing tools that can stimulate economic development and industrialization. The facilities and equipment provided by foreign investors can increase a workforce’s productivity in the target country. For instance,