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Fdi Is Essential For Economic Growth Of Country

2921 words - 12 pages

Foreign Direct Investment is

Essential for

Economic Growth

Of a Country.

Contents

• Introduction………………… … (1)

• Definition of Foreign Direct Investment(FDI)………………... (2)

• Detailed Meaning of FDI… ... (3-4)

• Motives……………… ……….. (4)

• Types of FDI……………………...(5)

• Merits of FDI…………………..(6-8)

• Economic Development ……(8-10)

• Demerits of FDI…….………..(11-13)

• Conclusion…..…………………..(13)

• References… ………………..(14-15)

(ii)

Introduction

Knowledge has many branches and economic is an important and useful branch of knowledge. In recent years, the ...view middle of the document...

• Foreign direct investment is that investment, which is made to serve the business interests of the investor in a company, which is in a different nation distinct from the investor's country of origin. 

OR

• FDI is defined as a company from one country making a physical investment into building a factory in another country. Its definition can be extended to include investments made to acquire lasting interest in enterprises operating outside of the economy of the investor.

Foreign direct investment (FDI) refers to long term participation by country A into country B. It usually involves participation in  management, joint-venture,  transfer of technology  and expertise.

(2)

Detailed Meaning of FDI

Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing. For a host country or the foreign firm which receives the investment, it can provide a source of new technologies, capital, processes, products, organizational technologies and management skills, and as such can provide a strong impetus to economic development.    Foreign direct investment, in its classic definition,  is defined as a company from one country making a physical investment into building a factory in another country.  The direct investment in buildings, machinery and equipment is in contrast with making a portfolio investment, which is considered an indirect investment. In recent years, given rapid growth and change in global investment patterns, the definition has been broadened to include the acquisition of a lasting management interest  in a company or enterprise outside the investing firm’s home country. As such, it may take many forms, such as a direct acquisition of a foreign firm, construction of a  facility, or investment in a joint venture or strategic alliance with a local firm with attendant input of technology, licensing of intellectual property,   In the past decade, FDI has come to play a major role in the internationalization of business. Reacting to changes in technology, growing liberalization of the national regulatory framework governing investment in enterprises, and changes in capital markets profound changes have occurred in the size, scope and methods of FDI.

(3)

New information technology systems, decline in global communication costs have made management of foreign investments far easier than in the past. The sea change in trade and investment policies and the regulatory environment globally in the past decade, including trade policy and tariff liberalization, easing of restrictions on foreign investment and acquisition in many nations, and the deregulation and privatization of many industries, has probably been...

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