The paper "Worldwide Patterns of Foreign Direct Investment " is a great example of finance and accounting coursework. This short essay seeks to explore how contemporary Foreign Direct Investment (FDI) trends with a special interest on how FDI’ s triggered currency flows have contributed in the emergent reduction of domestic policy influences on international investment. From the outset, it is important to note that this paper supports and propagates as fact, the emergent scenario in which FDI’ s currency flows have largely contributed to the reduction of domestic policy influence. It is the central belief of the paper that FDI has in recent times achieved much in integrating regions and nations into trading blocks and markets, featured by lesser and lesser domestic policy control of international investment The subject of discussion shall be Foreign Direct Investment, its patterns and practices, and how the need for increased FDI inflows has influenced FDI needy nations to reduce policy barriers for the international investors as an incentive.
In many instances, foreign investors, be they nations, organizations, business interests or financial institutions, abhor those nations with restrictive investment policies and prefer instead, countries that allow a maximal return on their investments to bloom with as little domestic interruptions as possible (Gionea 2005, pp.
224). FDI has had the greatest hand and influence in the changing domestic policy on international trade (Barton & Fisher 1986, pp. 567 – 603). This essay shall first discuss FDI from a management perspective before highlighting the contemporary patterns of FDI and discussing the perpetual growth that FDI has experienced in recent years, as an integral part of international business and investment. Further, the essay will discuss the role of FDI in modern international business practices, and how the domestic policy of a nation interacts with that nation’ s FDI growth.
An important section of the discussion also shall be how national/jurisdictional governments influence FDI in their nations. Towards the end of the discussion, the essay shall highlight the way forward for FDI as well as a review of how foreign control is perceived in most FDI realizations. Foreign Direct Investment (FDI) According to Gionea (2005, pp. 222), Foreign Direct Investment (FDI) can be defined as the purchase and or acquisition of assets, resources or significant stock (amount of ownership) in a company located in another country as a strategy of gaining control of the company’ s management.
Unlike portfolio investment whose manner of ownership does not involve gaining management control to any degree, Gionea says that FDI targets management control (2005, pp. 222). According to Gionea, FDI takes center stage in the management of the companies invested in, to the extent that most local companies and investments can be controlled by foreign interests in their strategic operations, investment decisions, productions costs, market competition strategies, repatriation of profits and other important management functions of a company (2005, pp.
227). Whenever a country allows FDI to be a measure of economic development, they have in turn given foreign interests the permission and mandate to run/manage the local firms in such a way as shall be mutually beneficial (Gionea 2005, pp. 227). Most FDI sources are interested in managing their investments themselves, and will rarely take a back seat to watch as the companies they have invested in be managed by others (Williams 1982, pp.
348; De Souza & Stutz 1997, pp. 99 – 105).
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