ECONOMICS

Economics

Foreign direct investment

One of the most significant concepts that are related to economic development of the countries, the whole idea of the economic growth and progress of any country is directly related to the amount of investment made in the country. Foreign direct investment pertains to the idea that the whole premise of the development of the countries. The term itself is defined as “a direct investment into production or business in a country by an individual or company of another country, either by buying a company in the target country or by expanding operations of an existing business in that country” (Gottheil, 2012).

About the paper

The paper encompasses of the idea that the whole premise of foreign direct investment is not totally understood, and therefore, the paper investigates what impact does the foreign direct investment has upon the whole premise of the economic development of the country. The paper investigates whether it leads to more dismay in the economy than the stability or vice versa.

Question 1

The costs of FDI are far more than generally anticipated notions in the economy. It is a general picture that FDI does not only strengthens the economy due to the inflow of the income from other countries, but also the premise that FDI has to be very dangerous to the country, this is because of the way it hurts the businesses running down and so on.

The term inward FDI pertains to the foreign direct investment in which the company that belongs to a foreign land pertains to buy one or more local entities for their business. The phenomenon usually leads to mergers and acquisitions, as well as, hostile takeovers. As a result, the whole picture of the notion is to focus the development of the nation; however, there is more to it. The paper encompasses of the idea that the whole picture of the way people look at foreign direct investment is not about benefits, but also cost and compensation.

As we examine the impact of inward foreign direct investment is not as positive. The notion is about the tax revenues, the job creation, the employment of resources, the efficient addition to GDP and so on, however, if looked at the long term consequences, the idea of the development of such a scenario could lead to severely questionable consequences. In addition to that, the advent of the foreign direct investment could lead to better management systems, the development of the social welfare and several other benefits. The money comes through the foreign direct investment comprises of a direct inflow of the cash to the country, whereas, it focuses the advancement of business technologies with an innovative edge.

In the long run, such phenomenon bears huge costs. For instance, the development of the technology for doing new things and performing the processes in the businesses are merely comprised of the companies that enter from outside. The facet of local entrepreneurship goes down, as the huge giant takes away all the resources, as ...