Gender Sensitivity

Topics: Foreign direct investment, Investment, Macroeconomics Pages: 8 (2368 words) Published: January 13, 2013
Foreign direct investment (FDI) is direct investment into production or business in a country by a company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country. Foreign direct investment is in contrast to portfolio investment which is a passive investment in the securities of another country such as stocks and bonds. Contents  [hide]  * 1 Definitions * 2 Types * 3 Methods * 4 Importance and barriers to FDI * 4.1 Foreign direct investment and the developing world * 4.2 Difficulties limiting FDI * 5 Foreign direct investment by country * 5.1 Foreign direct investment in the United States * 5.2 Foreign direct investment in China * 5.3 Foreign direct investment in India * 5.3.1 2012 FDI reforms * 6 See also * 7 References * 8 External links| -------------------------------------------------

Foreign direct investment can take on many forms and so sometimes the term is used to refer to different kinds of investment activity. Commonly foreign direct investment includes "mergers and acquisitions, building new facilities, reinvesting profits earned from overseas operations and intracompany loans."[1] However, foreign direct investment is often used to refer to just building new facilities or greenfield investment, creating figures that although both labeled FDI, can't be side by side compared. As a part of the national accounts of a country, and in regard to the national income equation Y=C+I+G+(X-M), I is investment plus foreign investment, FDI refers to the net inflows of investment(inflow minus outflow) to acquire a lasting management interest (10 percent or more of voting stock) in an enterprise operating in an economy other than that of the investor.[2] It is the sum of equity capital, other long-term capital, and short-term capital as shown the balance of payments. It usually involves participation in management, joint-venture, transfer of technology and expertise. There are two types of FDI: inward and outward, resulting in a net FDI inflow (positive or negative) and "stock of foreign direct investment", which is the cumulative number for a given period. Direct investment excludesinvestment through purchase of shares.[3] FDI is one example of international factor movements. foriegn direct investment is nothing but inrease the country's economy . -------------------------------------------------

1. Horizon FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI.[4] 2. Platform FDI
3. Vertical FDI takes place when a firm through FDI moves upstream or downstream in different value chains i.e., when firms perform value-adding activities stage by stage in a vertical fashion in a host country.[4] Horizontal FDI decreases international trade as the product of them is usually aimed at host country; the two other types generally act as a stimulus for it. -------------------------------------------------

The foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods: * by incorporating a wholly owned subsidiary or company anywhere * by acquiring shares in an associated enterprise

* through a merger or an acquisition of an unrelated enterprise * participating in an equity joint venture with another investor or enterprise Foreign direct investment incentives may take the following forms: * low corporate tax and individual income tax rates

* tax holidays
* other types of tax concessions
* preferential tariffs
* special economic zones
* EPZ – Export Processing Zones
* Bonded Warehouses
* Maquiladoras
* investment financial subsidies
* soft loan or loan guarantees
* free land or land subsidies
* relocation & expatriation
* infrastructure subsidies
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