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Using empirical evidence, discuss the various reasons for FDI. Are any of the reasons more prominent?
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Essay Using empirical evidence, discuss the various reasons for FDI. Are any of the reasons more prominent? Foreign Direct Investment is a difficult subject to argue because it involves both positive and negative debates in the increasingly globalise financial environment. Some advantages of FDI for the host country include: a stimulation of economic activity and an increase in the level of employment, a freer flow of capital, stimulating the local economy, and overcoming impediments to trade. One the other side, the disadvantages of FDI for the host country include a longer-term balance of payments loss as funds are remitted overseas, a loss of political and economic sovereignty, and a destabilisation of monetary policy and large international currency flows. Through this essay, we will first try to define the concept of Foreign Direct Investment. We will then analyse the theories and arguments as to why FDI can benefit and disadvantage both the companies...
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