Direct Foreign Investment (DFI)

Added on - 29 Apr 2020

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Running head: DIRCET FOREIGN INVESTMENT1Direct Foreign InvestmentThe name of the studentThe name of the Institution
DIRCET FOREIGN INVESTMENT2Executive summaryThe Direct Foreign Investment (DFI) is driven by a number of factors such as theeconomic, political, and the legal systems that are set up in a country. The category of thecountry as underdeveloped, developing, or developed too determines the attractive level at whichthe country will be at as compared to others. If a country is underdeveloped, its DFI levelsreduce as it will be difficult for the host country to start business in a jurisdiction that has gotlower levels of law enforcement, has no developed infrastructure, and/or has high chances ofcrimes and corruption too. In this report, I have focused on the key explanation of these termsand decided to work with New Zealand as a country that any foreign host would wish to set up abusiness in.
DIRCET FOREIGN INVESTMENT3ContentsExecutive summary.........................................................................................................................2Introduction......................................................................................................................................4Analysis of New Zealand.................................................................................................................4Political economy analysis..............................................................................................................5Comparison of the political, economic, and legal systems and their benefits, risks, and costs.......6The political system.....................................................................................................................6The economic system...................................................................................................................6The legal system...........................................................................................................................6Recommendation.............................................................................................................................7Conclusion.......................................................................................................................................7References........................................................................................................................................8
DIRCET FOREIGN INVESTMENT4IntroductionInvesting in another country by a host country is greatly determined by the country’spolitical, economic, and social factors that drive the said country. Investing in the lowest incomecountry or even underdeveloped country can lead to huge political payoff by the host country inthe country in order to be allowed to invest in it. They do have sufficient laws that protect theintellectual property owned by the foreign investors resulting in the loss of the intellectualproperty and profits in the host’s DFI financial reports. The purpose for choosing New Zealand isbecause it has an open and attractive attitude towards the foreign investment (Hill, 2015).Analysis of New ZealandDirect Foreign Investment must be done effectively in order to determine the bestbusiness that a host country can do in the country. It is an open country to any new investor asthey are treated similarly to the local investors (Kelsey, 2015). In order for the oversea investorto be allowed to invest in the industry, he or she must pass the test as it is a basic requirement ofthem (Parkyn & Vehbi, 2014). The host investor must make an application if he or she wants toacquire 25% of the total share of a company in the economy that has more that NZ $50 million(James, 2015).Political economy analysisThe political economy term is used to refer to the interactions of the politics and theeconomy of a certain country as they are the key drivers of that economy. It involves the analysis
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