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Foreign Direct Investment (FDI)

Direct Investment is a production in a country by a company located in different country, either by buying a company in the target country, or by expanding operations of an existing business in that country.

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Foreign direct investment and radical view

The radical view sees the Multinational Enterprise as an imperialist tool for exploiting host countries. According to this view, no country should allow FDI. Due to the collapse of communism, the radical view was in retreat everywhere by the end of the 1990s.

Foreign direct investment and pragmatic nationalistic view

Pragmatic nationalism views FDI as having both benefits and costs. Countries adopting a pragmatic stance pursue policies designed to maximize the benefits and minimize the costs of FDI.

Foreign direct investment and inflow and outflow

FDI consists of the acquisition or creation of assets (e.g. firm equity, land, houses, oil-drilling rigs.) undertaken by foreigners. If these are enterprises, they are not alone but act together with local firms and/or governments as “joint ventures”. Moreover, A country outflows of FDI means that it is exporting money to buy or build foreign productive capacity whose ownership will remain in the first country’s hands, and for a country attracting an inflow of FDI strengthen the connection to world trade networks and finance its development path.

Foreign direct investment and stock of FDI

Stocks measure the total level of direct investment at a given point in time, usually the end of a quarter or yearly. The outward FDI stock is the value of the resident investors’ equity in and net loans to enterprises in foreign economies. The inward FDI stock is the value of foreign investors’ equity, in and net loans to enterprises resident in the reporting economy. FDI stocks are measured in USD, and as a share of GDP. FDI creates stable and long-lasting links between economies.

References

Administration, I. T. (2018, February 2). Utah Exports, Jobs, & Foreign Investment. Retrieved March 3, 2018, from https://www.trade.gov/mas/ian/statereports/states/ut.pdf

International Investment, O. F. (2012, January 4). Foreign Direct Investment in Utah. Retrieved March 1, 2018, from http://www.ofii.org/sites/default/files/Utah.pdf

USA, S. (2017, August 7). FDI: Utah. Retrieved April 4, 2018, from https://www.selectusa.gov/servlet/servlet.FileDownload?file=015t00000004psc

LICENSES AND ATTRIBUTIONS

Foreign Direct Investment by Lumen Learning is licensed under CC BY-NC-SA 4.0 / A derivative from the original work