The Costs and Benefits of Fdi for Indonesia as the Home Country

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Abstract

The costs and benefits of FDI for indonesia as the home country

Nur masyitha

Foreign direct investment (FDI) is an integral part of an open and effective international economic system and a major catalyst to development. Yet, the benefits of FDI do not accrue automatically and evenly across countries, sectors and local communities. National policies and the international investment architecture matter for attracting FDI to a larger number of developing countries and for reaping the full benefits of FDI for development. This essay has the purpose to know about The costs and benefits of FDI for indonesia as the home country. This essay has three sections. Firstly introductiory which will focus on mean of FDI and describe condition FDI in Indonesia . Secondly the description of The costs and benefits of FDI for indonesia. Thirdly the summary of condition The costs and benefits of FDI for indonesia so will be conclude this essay.

Outline

A.Introduction

A.I Mean of FDI

A.II FDI in indonesia

B.Metode

B.I The costs and benefits of FDI for indonesia

C. Conclution

The costs and benefits of FDI for indonesia as the home country

Mean of FDI

FDI or Foreign Direct Investment is any form of investment that earns interest in enterprises which function outside of the domestic territory of the investor. Foreign direct investment (FDI) is an integral part of an open and effective international economic system and a major catalyst to development. FDIs require a business relationship between apparent company and its foreign subsidiary. Foreign direct business relationships give rise to multinational corporations. . Factors detrimental to the growth of FDIs include necessities of differential performance and limitations related with ownership patterns. Foreign Direct Investment is guided by different motives. National policies and the international investment architecture matter for attracting FDI to a larger number of developing countries and for reaping the full benefits of FDI for development. The challenges primarily address host countries, which need to establish a transparent, broad and effective enabling policy environment for investment and to build the human and institutional capacities to implement them.

FDI in Indonesia

Indonesia has the availability of vast, highly diversified natural resources, a huge potential domestic market, a competitive and productive labor force and a market oriented economic policy, among other factors that have attracted FDI inflows. The intricacies of setting up a company and making an investment in Indonesia are many. The Indonesian government will have to put a high priority on developing and upgrading the country's human resources in order to raise their capacity to absorb, assimilate, modify, and improve the imported technologies, whether transferred through FDI or purchased through technical licensing agreements with transnational corporations (TNCs).

Foreign Direct Investment (FDI) inflows to Indonesia reached $23,648 million during 1990-1997 supported by the growing integration of world capital market. The early 1990s delivered a strong recession to developed countries, which made profit opportunities in developing countries appear relatively more attractive (Calvo, Leonardo, and Carmen, 1996). Market oriented reforms and capital market liberalization also offered an improvement in the investment atmosphere. This brought substantial benefits including increased investment, fast economic growth, and an improved standard of living.

Direct investment has been an essential factor driving export-led growth and a vital source of capital during the crisis in Indonesia. Foreign firms have played a leading role in export sectors, especially in labor-intensive manufacturing. Through those investments, the economy has been transformed from agriculture and exploitation of raw materials into producers and...
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