Impact of Fdi on Home Country
Positive and Negative impacts of FDI on home country
* Overview * Positive impacts * Negative impacts * Solutions * Conclusion 2013
POSITIVE AND NEGATIVE IMPACTS OF FDI
ON HOME COUNTRY
CONTENTS
I. FDI Overview…………………………………….04
II. Positive impacts of FDI on home country….…...11
III. Negative impacts of FDI on home country……..18
IV. How to solve for negative impacts of FDI on home country…………………………………………....25
V. Conclusion...………………………………….......29
I. FDI Overview:
1. Introduction:
The term “Foreign Direct Investment” or “FDI” encompasses two related but different sets of topics or activities, explained by different theories and by different branches of economics. The first might be referred to as the international finance, or macro, view. The second might be referred to as the industrial organization, or micro, view.
The macro view sees FDI as a particular form of the flow of capital across national borders, from home countries to host countries, measured in Balance of Payments Statistics. Those flows give rise to a particular form of stocks of capital in host countries, namely the value of home country investment in entities, typically corporations, controlled by a home country owner, or in which a home country owner holds a certain share of voting rights. The variables of interest are the flow of financial capital, the value of the stock of capital that is accumulated by the investing firms, and the flows of income from the investments.
The micro view tries to explain the motivations for investment in controlled foreign operations, from the viewpoint of the investor. It also examines the consequences to the investor, and to home and host countries, of the operations of the multinationals or of the affiliates created by these investments, rather than the size of the flows or the value of the investment stocks or investment position. These consequences arise from their trade,
* Overview * Positive impacts * Negative impacts * Solutions * Conclusion 2013
POSITIVE AND NEGATIVE IMPACTS OF FDI
ON HOME COUNTRY
CONTENTS
I. FDI Overview…………………………………….04
II. Positive impacts of FDI on home country….…...11
III. Negative impacts of FDI on home country……..18
IV. How to solve for negative impacts of FDI on home country…………………………………………....25
V. Conclusion...………………………………….......29
I. FDI Overview:
1. Introduction:
The term “Foreign Direct Investment” or “FDI” encompasses two related but different sets of topics or activities, explained by different theories and by different branches of economics. The first might be referred to as the international finance, or macro, view. The second might be referred to as the industrial organization, or micro, view.
The macro view sees FDI as a particular form of the flow of capital across national borders, from home countries to host countries, measured in Balance of Payments Statistics. Those flows give rise to a particular form of stocks of capital in host countries, namely the value of home country investment in entities, typically corporations, controlled by a home country owner, or in which a home country owner holds a certain share of voting rights. The variables of interest are the flow of financial capital, the value of the stock of capital that is accumulated by the investing firms, and the flows of income from the investments.
The micro view tries to explain the motivations for investment in controlled foreign operations, from the viewpoint of the investor. It also examines the consequences to the investor, and to home and host countries, of the operations of the multinationals or of the affiliates created by these investments, rather than the size of the flows or the value of the investment stocks or investment position. These consequences arise from their trade,