Examples of Foreign direct investment in the following topics:
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- Intel is headquartered in the United States, but it has made foreign direct investments in a number of Southeast Asian countries where they produce components of their products in Intel-owned factories.
- Foreign direct investment (FDI) is investment into production in a country by a company located in another country, either by buying a company in the target country or by expanding operations of an existing business in that country.
- However, identifying the conditions that best attract such investment flow is difficult, since foreign investment varies greatly across countries and over time.
- Sao Paulo, Brazil, home to a growing middle class and significant direct investments.
- Explain the effects of foreign direct investment (FDI) for the investor and the host country
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- Corporations may make a foreign direct investment.
- Foreign direct investment is direct investment into one country by a company located in another country.
- Finally, depending on the nature of the MNC, investment in any country reflects a desire for a medium- to long-term return, as establishing a plant, training workers and so on can be costly.
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- The growth in cross-border economic activities takes five principal forms: (1) international trade; (2) foreign direct investment; (3) capital market flows; (4) migration (movement of labor); and (5) diffusion of technology (Stiglitz, 2003).
- Foreign Direct Investment (FDI): According to the United Nations, FDI is defined as "investment made to acquire lasting interest in enterprises operating outside of the economy of the investor".
- Direct investment in constructing production facilities, is distinguished from portfolio investment, which can take the form of short-term capital flows (e.g. loans), or long-term capital flows (e.g. bonds) (Stiglitz, 2003).
- Since 1980, global flows of foreign direct investment have more than doubled relative to GDP (World Briefing Paper, 2001).
- Capital market flows: In many countries, particularly in the developed world, investors have increasingly diversified their portfolios to include foreign financial assets, such as international bonds, stocks or mutual funds, and borrowers have increasingly turned to foreign sources of funds (World Briefing, Paper, 2001).
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- For a firm considering a new foreign market, there are three broad categories of international business: trade, international licensing of technology and intellectual property, and foreign direct investment.
- On the other side of the spectrum is direct foreign investment, which generally brings the greatest economic exposure and thus the greatest risk to the company.
- Many reasons may cause governments to change their policies toward foreign enterprises.
- Changes in policies can impose more restrictions on foreign companies to operate or limit their access to financing and trade.
- In some cases, changes in policy may be favorable to foreign businesses as well.
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- A joint venture is a partnership between a domestic firm and a foreign firm.
- Both partners invest money and share ownership and control of partnership.
- Thus, they will invest in wholly owned subsidiaries.
- An organization using this approach makes a direct investment in one or more foreign nations.
- However, subsidiaries require more investment as the subsidiary is responsible for all marketing activities in a foreign country.
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- This empowers domestic economies to gain a larger array of products, services, human capital, investment, and knowledge through leveraging external markets.
- What minimized globalization historically was the enormous time and capital investment in travel, creating 'trade spheres' around countries/civilizations that demonstrated potential trade proximity.
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- This can be helpful in the initial phases of considering the legal ramifications of direct investment in a given country.
- Many countries limit foreign ownership of assets and legally force foreign companies into a joint venture with a local partner in order to do business there.
- Poland, for example, limits foreign ownership of farmland and will continue to do so for another decade under agreements with the EU (Dadak, 2004).
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- A firm can export its products in one of three ways: indirect exporting, semi-direct exporting, and direct exporting.
- Sales, whether foreign or domestic, are treated as domestic sales.
- Indirect exporting involves very little investment, as no overseas sales force or other types of contacts need be developed.
- When direct exporting is the means of entry into a foreign market, the manufacturer establishes an export department to sell directly to a foreign film.
- Direct exporting requires a greater investment and also carries a greater risk.
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- The foreign exchange market is a form of exchange for international currencies that determines the relative values of different currencies.
- In a typical foreign exchange transaction, a party purchases a quantity of one currency by paying a quantity of another currency.
- The foreign exchange market determines the relative values of different currencies.
- The foreign exchange market assists international trade and investment by enabling currency conversion.
- It also supports direct speculation in the value of currencies, and the carry trade, speculation based on the interest rate differential between two currencies.
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- For example, foreign governments can intervene in marketing programs in the following ways:
- Most firms probably prefer to engage in the export business rather than invest considerable sums of money in investments in foreign subsidiaries.
- The result is that consumers in the foreign nation pay high prices, get less satisfactory products, and have fewer jobs.