Foreign Direct Investment for Development

This capital is very much like venture capital, in that it is aimed at setting up businesses or buying up capital stock in whole companies instead of portfolio investments, where the investment can go through the stock exchange for a small fractional share of the business.

Thus, many nations make it a priority to get this capital inflow especially to areas which the country thinks are of primary importance.

There are many reasons why the fortunes in terms of FDI flows change for companies. Supply of FDI funds typically go to acquire technological knowledge, to capture an increasing share of international market, to cheaper production facilities, and for other purposes that require a direct investment into the host country.

The positive effects from FDI inflows include technology spillovers, assistance in human capital formation, contribution to international trade integration, and help in creating a more competitive business environment and enhancement of enterprisedevelopment.

All of these contribute to higher economic growth.

The effects of FDI on an economy take books to discover and there are several available, including:

Does Foreign Direct Investment Promote Development? by Theodore H. Moran , Edward M. Graham and Magnus Blomström.

Foreign Direct Investment and Development: The New Policy Agenda for Developing Countries and Economies in Transition by Theodore H. Moran

The Impact of FDI on Economic Growth: An Analysis for the Transition Countries of Central and Eastern Europe (Contributions to Economics)

The Impact of FDI on Economic Growth: An Analysis for the Transition Countries of Central and Eastern Europe (Contributions to Economics) by Marco Neuhaus

Understanding FDI-Assisted Economic Development by R. Narula

FDI And Industrial Organization in Developing Countries: The Challenge of Globalization in India by Pradeep Kanta Ray


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