Costs and Benefits of Foreign Direct Investment

Introduction Over the years, Foreign Direct Investment (FDI) has become a popular way for countries to transfer capital flows from one country to another. Basically, Foreign Direct Investment is just a moment when an entity in a country wants to invest in income-generating assets in other countries and want to earn investment income. Foreign direct investment is beneficial for foreign investors, countries and host countries (Froot 1993, 60). However, it should be noted that the benefits of foreign direct investment can not be achieved unless all three comply with the correct regulations and comply with the ethical approach.

The motivation for foreign direct investment is to develop markets, reduce costs, and acquire strategic assets. The new market attracts foreign direct investment which will help to establish close benefits to new markets such as close interactions with suppliers and customers or a sub-regional image of the company. Because the company exports products using these markets, the foreign investment policy of the infected market is very important. Strategic motivation is an important motivation for foreign direct investment as multinational companies tend to target oligopolistic industries competing globally or regionally. Therefore, investment decisions are not autonomous, taking into account the behavior, behavior and expectations of competitors of companies. For various reasons, multinational corporations, such as establishing a pioneering advantage, acquiring specific websites or establishing a brand name, are trying to expand their business in recent open markets.

When a company adopts Foreign Direct Investment (FDI), it becomes a multinational company and multinational companies receive large amounts of direct investment abroad. Foreign direct investment (FDI) refers to the long-term participation between foreign countries and recipient countries, such as management, partnership, technology transfer. Foreign direct investment has become an important acceptance of the world economy, many countries have relaxed restrictions on foreign direct investment, and many recipient countries have reduced trade barriers of foreign companies operating in their own country.