1. assignment. [Document subtitle]. Foreign Investment.
Added on - 23 Sep 2019
1ForeignInvestmentIt is related to the investment which is made by an individual of foreign or by a business in theconstructive capacity of some other country. It can be measured as the capital’s movement acrossnational borderlines in such a way that enables the investors to have a direct control on theinvestment. The business firms which provides foreign direct investment are known asmultinational companies. The investors can directly invest in the businesses which are theexisting ones and can also promote them. There are two types of foreign direct investment i.e.outward and inward (Lall et al., 2013). The accretive of both results in net foreign directinvestment inflow. Foreign direct investment is allowed freely in most of the sectors except fewlike defense, coal, and lignite, etc. as foreign direct investment is not permitted beyond theceiling.Foreign direct investment plays the significant role in the developing countries. As they enact thesource of long term for the capital and as a source of developed and advanced technologies aswell. Foreign direct investment helps in maximizing employment and the international trade. Theinvestment is non-volatile and non-debt, and the received returns are mostly spent on hostcountry for the development (Moran, T. H. 2012). The developing country i.e. Asia fascinatedmore foreign investment that the United States and the European Union. The developed countriesalso require the investment for the cross border but for distant reasons. In 2014, the world foreigndirect investment reduced 16 percent to $1.2 trillion. After increasing 9 percent to $1.46 trillionin 2013. The foreign investment is in various forms like foreign loans, portfolio investment, etc.The foreign loans are used for the infrastructure. The foreign investment and economic growthare interlinked (Yarbrough et al., 2014).As the countries require a large inflow of foreigninvestment in order to gain a sustainable competitive advantage.
2The Advantages of Foreign Investment to the Recipient CountryEasy International Trade-The countries have an own tariff on import, and this makes the trading difficult. But the recipientcountry gets an advantage of foreign investment as the international trade becomes easy in orderto make sure that the goals and sales are adequately met.Boost in Employment and Economy-The recipient country gets the advantage in order to develop new jobs, and the new companiesare built in that country to explore new opportunities. Further, the income and buying power ofpeople is maximized, and this boosts the economy.Development of Human Capital Resource-The recipient country gets the advantage of developing the human capital resource. As it is aknowledge of people, who works as labor. The characteristics which are achieved by the trainingand development helps in maximizing the human capital of the country.Reduction in Disparity between Cost and Revenues-The recipient country gets the advantage of the foreign investment in order to ensure that the costof production will be equal and would be easily sold by reducing the disparity between revenueand cost.Increment in Income-