Foreign Direct Investment (FDI) Essay Example | Topics and Well Written Essays - 2500 words

Foreign acquit Investment (FDI) - Essay ExampleForeign reign enthronization has increasingly been a cable geld of multinational corporations in spite of appearance the global economy.Foreign Direct Investment is delimit by Ho and Yiu Lau as the investing of a company in a contrary country which aims at acquiring a long economic involution in business enterprises within the boniface country. FDI can also be defined as an enthronisation of a company in a foreign country by structure a factory within the host country. It is done a companys sharpen coronation in machinery, structure and equipment in another country that foreign direct investment is made possible. With the issue of globalization and the global economy, FDI has played a leading role in the development of global business enterprises. Kennedy (2001, p. 585) say that the definition of foreign direct investment has been broadened with the increased change in the patterns of global investment by companies. A s a result, FDI includes acquisition of managerial interests in companies and enterprises in foreign countries. The managerial interest may not involve investment in buildings or equipment but managerial decisions are find by executives who are foreign to the host country. The rapid exploitation of companies which is attributed to the internationalization and use of technology has spread out FDI to incorporate the growth patterns of world economies as demonstrated by Constant and Yaoxing (2010, p. 99) Foreign direct investment is a reaction to the increased liberalization of business activities, changes and advancements in in socio-economic classation and communication technology and great(p) market changes. Jermakowicz and Bellas (1997, p. 33) explain that through the liberalization of national and regional business regulatory frameworks and governance, foreign direct investment has been achieved. Globalization has enabled foreign direct investment to be achieved by internation al companies and corporations. It is however argued that information and communication technology has played the most significant role in the consummation of foreign direct investment. Technology has allowed companies to invest in foreign countries due to the ease of management that is made possible through the adoption and implementation of information systems. In return, foreign direct investment has enabled the process of internationalizing businesses and companies hence promoting the growth of the global economy as said by Fahim-Nader and Zeile (1995, p. 57). Foreign direct investment can wee several forms. According to Driffield and Munday (2000, p. 21), there are many forms of foreign direct investment and these include juncture ventures, construction of facilities, acquisitions, mergers, strategic alliance, licensing and input of technology. Joint ventures as a form of foreign direct investment includes a company engaging in a business endeavor with another company within a foreign country. The business activities of the joint venture are usually carried out within the host country. Joint ventures within foreign direct investment include two companies from two different countries advance together with an intention of undertaking a business in a specific industry for achievement of common goals. Belderbos, Jie-A-Joen and Sleuwaegen, (2002, p. 155) assert that in foreign direct investment, companies may construct facilities such as factories, hospitals, institutions or infrastructure in a foreign country. This form of foreign investment thus involves direct and participating input of capital for construction of these facilities. The investor company that ventures in the foreign direct investment through building structures usually takes the ownership of these structures even though they provide economic benefits to the host country. Lowe (2006, p. 34) explains that acquisitions as a form of foreign direct investment includes a company acquiring the a ssets of another company within the foreign country. The acquisition of a foreign company makes the investing company the