Factors Influencing Foreign Direct Environment - 3224 Words

MD3042 CONTEMPORARY ISSUES IN GLOBAL BUSINESS MANAGEMENT Factors Influencing Foreign Direct Investment The world is becoming a global village and more companies are now operating at an international level. This essay critically analyses some of the factors which influence Foreign Direct Investment (FDI). Morrison (2006) defined FDI as the establishment of a company of a productive nature in a foreign country involving large volume of shareholding in foreign operations. The essay will investigate how important FDI is in the process of globalisation and in the activities of multinational enterprises as well as examining how international trade and FDI are interlinked. There will also be a discussion of different reasons why companies†¦show more content†¦FDI has broadened its meaning into the acquisition of a lasting management interest in a firm outside the investing enterprise’s home country. For the reason above, it comes in different forms which include direct acquisition of foreign companies, construction of a factory in a foreign country and investment in joint ven tures. Britton and Worthington (2009) described FDI as an important aspect of globalisation as well as the activities of multinational companies. Over the recent years, FDI has responded to new information technology systems, the reduction in global communication costs and the liberalisation of the national regulatory framework which controls investment in enterprises, (easing of restrictions and on foreign investments and acquisition in many nations) have simplified the management of foreign investments as compared to the past ( Spaulding and Graham, 2004). These are some of the factors which fuelled FDI’s expanded role in today’s global business. According to the UNCTAD (2004) foreign direct investment flow in developing countries has exploded through mergers and acquisition and internationalisation of production in a range of industries. FDI in developed countries rose from $481 billion in 1998 to $636 billion in 2004 (UNCTAD, 2004). Advocates of FDI suggest that the exchange of investment flows benefits both the home country and the host country, however some critics noted thatShow MoreRelatedPricing For Export Market Is The Most Important Factors Determining The Performance Of Export Ventures1186 Words   |  5 Pagesexport market is one of the most important factors determining the performance of export ventures. Scholars describe the export pricing as one of the prime devices used by the exporters to adapt offering to fulfil the requirement of foreign markets (Myers et al 2000). In the competitive export pricing environment, it is expected that export performance is impacted by competitive export pricing. 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