Analysis of advantages and disadvantages of FDI

Introduction With the development of economic globalization, unknown broadcast enthronement (FDI) is progressively being recognized as an important factor in the economic development of countries. Although FDI began centuries ago, the biggest harvest-time has occurred in recent years. This baffle resulted from several factors, particularly the more receptive attitude of governments to enthronisation inf firsts, the process of privatization, and the growing interdependence of the world economy. Foreign direct investiture (FDI) occurs when a firm invests directly in facilities to produce and/or market a product in a inappropriate country (charles w.l.hill, International business). FDI takes on ii of import forms; the first is a green-field investment, which involves the establishment of a alto proceedher wise operation in a foreign country. The south involves getting or merging with an existing firm in the foreign country. On the other hand, FDI is divided into two kinds; horizontal FDI (market-expansion investments) which is investment in the same fabrication abroad as a firm operates in at home; And straight FDI (resource-seeking investments), which comprises two forms further; the first is backward vertical FDI commit an industry abroad that provides inputs for a firms municipal labor process. The sec is frontwards vertical FDI in which an industry abroad sells the foods of a firms domestic production processes.

Analysis of advantages and disadvantages of FDI In addition to FDI, the firms be also able to billow foreign market by means of exporting and licensing. Comp ard with exporting and licensing, the advantages of FDI for compani es 1. Low menu cost. As far as the firms w! hich principally adopt horizontal FDI are concerned, transportation cost moldiness normally be considered to production costs. When the firm produces a low value-to-weight ratio production such(prenominal) as margarine report and the like, relative to exporting, FDI would only contain a low transportation cost. But for... If you want to get a full essay, suppose it on our website: OrderEssay.net

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