Foreign Direct Investment and Diamond of National Advantage

Foreign Direct Investment
FDI
DIAMOND OF NATIONAL ADVANTAGE
University Name-

Table of Contents
Answer to question no-1.............................................................................................................................2
FOREIGN DIRECT INVESTMENT..........................................................................................................2
DIAMOND OF NATIONAL ADVANTAGE........................................................................................................2
Factor Conditions....................................................................................................................................3
Demand conditions..................................................................................................................................3
Related and Supporting Industries...........................................................................................................3
Firm Strategy, Structure, and Rivalry......................................................................................................3
ATTRACTING AND RETAINING FDI....................................................................................................5
Answer to question no-2.............................................................................................................................6
POLICIES AND STRATEGIES THAT THE GOVERNMENT SHOULD ADOPT TO ENHANCE THE CAPACITY OF
ITS INDUSTRIES TO INNOVATE AND UPGRADE........................................................................................6
REFERENCES................................................................................................................................................9

With the ramified changes in the economic factors and growth of the business, it is analyzed that
the fundamental of competition has shifted significantly to the creation and assimilation of
knowledge hence, role of the nation has grown. In context with the same following two answers
are given as below.
Answer to question no-1
The objective of this paper is to identify the factors responsible and needed to attract and
retain the Foreign Direct Investment in Kuwait. The Porter’s Diamond of National Advantage is
used to identify the factors affecting the FDI in Kuwait market. In the world, Kuwait. is the
largest economy accompanied with the $657 billion and a per capita GDP (PPP) of $25,700,
therefore, it becomes imperative for Kuwait to attract and retain FDI in order to grow its
industries (Abdouli, & Hammami, 2017).
There is a need for Kuwait companies to grow and compete against the globally available
and spread companies. To achieve this it has to fight against the competitive international
investment.
There are numerous international companies employing Kuwait. Without FDI the
existence of many Kuwait companies seems impossible which has a direct relation to the money
floating in the economy and jobs (Abdouli, & Hammami, 2017).
FOREIGN DIRECT INVESTMENT
When a business interest is located in one country and the business make investments in
businesses located in another country is FDI. It comes into action when an investor set up
businesses in the foreign land or foreign business assets which include the ownership or control
in the foreign companies (Voicu, Sen, and Martinez-Zarzoso, 2018).
DIAMOND OF NATIONAL ADVANTAGE
Diamond theory of National Advantage was given by Micheal Porter, According to this
model, features of a home country are vital in considering its presence in the international
market. It has been called a Diamond theory, because of the shape it has in the framework. This
model explains the industrial success in the global economy (Collinson, 2015).

Determinants of the national advantage
Source-https://www.researchgate.net/figure/Porters-diamond-of-national-competitive-advantage-
Source-Porter-ME-1990-Figure_fig1_325363150
Factor Conditions
Factor conditions are the conditions and factors can be used by the organizations and
industries in any nation, such as, natural and man-made resources and labor. The Kuwait
sunshine, steady climate, fertility of soil and less pollution makes a conducive environment for
the industries to grow (Intriligator, 2017).
Demand conditions
It is defined as the size of the domestic demand of a product. When there is a local
product which has a large supply and demand locally than in the foreign market, in that case the
local firms will focus on improving the quality and will focus more on improvement than foreign
companies. This will eventually enhance the global competitiveness for the local products and
companies (Jones, and Wren, 2016).
Related and Supporting Industries
This relates to the occurrence and nonexistence of supplier industries and other directly
or indirectly related industries. If the local suppliers are competitive it will be cost effective and
efficient for the country and respective industries (Codagnone, Abadie, and Biagi, 2016).
Firm Strategy, Structure, and Rivalry
Local conditions affect the functioning of an industry in the home country. The
organizational structure could be flat or hierarchical impacting the functioning of other industries