FOREIGN DIRECT INVESTMENT (FDI)
- Deﬁnitions, theories, beneﬁts.
Characteristics of econometric modeling
PhD. Senior Lecturer Gheorghe SĂVOIU
PhD Candidate Lecturer Suzana POPA
University of Pitesti
This paper analyzes some characteristics of economic and econometric literature in the ﬁeld of FDI after 1990, in Romania, as well as some speciﬁc issues in the process of practical modelling. A more detailed presentation of John Harry Dunning’s eclectic theory and a simple presentation of the theory of de-investment complete the general theoretical presentation of FDI. A ﬁrst problem after the deﬁnition, life cycle, similarities and differences between portfolio and direct foreign investment, after the beneﬁts of FDI, is given by the outstanding dynamics and structure of FDI. Some characteristic features of the value oscillation and structural dynamics of gross capital formation (GCF), gross capital ﬁxed capital formation (GFCF) and gross domestic savings (GDS) in GDP are relevant for the speciﬁcity of the phenomenon of FDI in Romania after 1990.
Key words: foreign direct investments (FDI), econometric model, foreign portfolio investments (FPI), matrix of correlations. ***
In the new century, which he have recently entered, the signiﬁcation of FDI has grown steadily and rapidly as global importance (according to The Economist, 2001, “FDI is globalisation in its most potent form”), on a par with an increase in the value and weight of that phenomenon, which has come to represent currently over 20% of the world GDP.
An international investment implies the existence of at least two economic agents, an issuing agent and a receiving agent, located in different national economic spaces, as well as an investment ﬂow from the issuer to the recipient. The investment ﬂows can be directed towards a receiving economy, or destination (inﬂow), conceptually representing investments, or can be generated by an issuing economy or investment source (outﬂow), meaning the investment outﬂows. Closely related to the clinical ﬂow investment issuer and the receiver can distinguish foreign portfolio investment (ISP) and foreign direct investment (FDI), ﬁrst holding a high migration potential, completely unstable character, Romanian Statistical Review nr. 1 / 2012
recasting itself as the “hot money “while the second category involves a long term relationship and lasting interest implies a control performed by a resident entity in one economy in an enterprise resident in another economy. Speciﬁcity of FDI, reﬂected in the diversity of its theories and models The dictionary deﬁnitions are still torn between the micro- and the macro-economic signiﬁcance.
FDI deﬁnitions with a micro-economic
FDI occurs when an individual or ﬁrm
acquires contro-lling interest in productive
assets of another country.
The New Palgrave Dictionary of Economics
FDI means an investment abroad, usually
where com-pany being invested in is
controlled by the foreign cor-poration.
FDI deﬁnitions with a macro-economic impact
FDI stands for Foreign Direct Investment, a
component of a country’s national ﬁnancial
accounts. FDI is investment of foreign assets
into domestic structures, equipment, and
organizations. On–line dictionary Economics
FDI is money from one country that is put
into businesses in another country. Business
The major similarities are: a) FDI and FPI remain primarily determined by economic factors, b) FDI and FPI assume ownership of major ﬁnancial resources; c) the direct investor (DI) and the portfolio investor (PI) assume particular risks; d) FDI and FPI have the same objective, that of achieving a proﬁt; e) FDI and FPI generate ﬂows of foreign investment. The differences are numerous and substantial: a) DI buys control and exertion of management of the investment, and has managerial skills, while PI buys securities; b) DI targets a return on long-term, while PI...
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