Using examples and case studies discuss and evaluate the impacts of foreign direct investment on host country economies.
Foreign Direct Investments are long term capital holdings directly invested in one country by another country. These foreign direct investments can be either outwards or inwards. The outward foreign direct investment is also referred to as investments abroad and is usually supported by the government against various types of risks associated with the investment1. It is also able to enjoy various types of incentives such as tax incentives. These are usually the investments invested by the country in to a foreign country2. The inward foreign direct investments are the investments invested by a foreign country in to the country1. Foreign direct investments can also be in the form of mergers and acquisitions, where a firm in a foreign country acquires a firm in the host country and obtains the power to make strategic decisions concerning the firm. Foreign direct investments usually result into the making of multinational corporations.
There are various reasons why people invest in foreign countries: They do this to expand and strengthen the markets that are already in existence or to explore and exploit virgin markets with incredible potential for profits. Some multinational corporations transfer strategic assets and capital in order to optimize the market opportunities that are available in order to improve their operational efficiencies and to enjoy economies of scale3.
Foreign direct investments have been viewed as a tool of driving economic growth and development in countries especially the less developed nations. It helps such countries build up and increase their physical and operating capital, create opportunities of employment, increase the capacity of production, globalize the local economy by introducing new products and skills in to... [continues]
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