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Foreign Direct Investment - Coggle Diagram
Foreign Direct Investment
Introduction
is the purchase of physical assets or a significant amount of the stock of a company in another country to gain management control.
Explanation For Foreign Direct Investment
Four Reasons for FDI
International Product Life Cycle
Market Imperfections (Internalization) Theory
Eclectic Theory
Market Power
Worldwide Flows of FDI
Develop countries are the main destinations. These countries account for 57% of global FDI inflows. But, the share is declining.
Devolping countries account for 37% of global FDI inflows. And, the share is rising. China attracts 6.4% of FDI while the whole of Africa 5.2% of FDI
Newly industrialized and emerging markets (particularly in Asia) are a growing source of FDI.
Three Reasons for FDI Growth
Increasing Globalization
FDI in the 1980s was aimed at getting around trade barries
International merger and acquisitions
Get a foothold in a new geographic market
Increase global competitiveness
Fill gaps in product lines in a global industry
Reduce costs in R&D, production and distribution
Rising FDI from entrepreneurs and small businesses
Entreprenuers and small businesses also engage in FDI and account for more of its growth.
Management Issues in the FDI Decision
Control
Purchase- or-Build Decision
Production Costs
Customer Knowledge
Following Clients
Following Rivals
Reasons for Intervention by Host Countries
To Control Balance of Payments
To Obtain Resources and Benefits
Reasons for discouraging outgoing FDI
Reasons for encouraging outgoing FDI
Host Countries FDI Policy Instruments
Promotion Methods
Restriction Methods
Promotion Methods
Restriction Methods