Foreign direct investment - these are real investments in the equity of the company, in the ground or fixed assets, which provide investors with a full or partial participation in management.
widespread this type of investment was due to the development of transnational corporations, which for various reasons have been profitable to invest the funds in other businesses, increasing profits and, as a rule, get them in the property (often these companies are part of the TNC as a subsidiary).In some cases, direct investment - it is also a political lever of influence.
direct investments are considered to be any investment in excess of 10% of the property.Part of the shareholding can be obtained in exchange for pictures, technology and other tangible and intangible benefits.
most active foreign direct investment compared with the volume of world trade began to increase, since the 80s.The reason for this is the integration of production, general processes of globalization, the increased role of transnational corporations, the economic policies of developed countries, but also with pleasure the establishment of the Third World conditions to attract such investment in their economies.
Factors that encourage foreign direct investment
Marketing factors - one of the most important.TNK-growing need to expand the market to maintain and increase their sales.The limited size of the domestic market make the necessary geographical diversification of production.
Trade restrictions - FDI allow TNCs to circumvent trade restrictions and safely operate abroad as a local company that allows you to save on import payments and customs clearance of cargo.It is also being done to increase the loyalty of customers who prefer to purchase products from domestic producers.
Cost factors - often direct investment and, consequently, the creation of an enterprise in another country can save on the most important kinds of costs - for raw materials and labor costs.This is what makes the big companies to move their production to less developed countries, allowing several times to reduce the cost of production.In addition, it can increase the reliability of the sources of raw materials.Another reason - is often easier and cheaper to install a new enterprise's own quality control system and bring its technology than to manage trade flows of the parent company.
investment climate in the investee country - also a very important factor.Some countries, such as Canada, are actively supporting their own producers and impose high import duties, which makes direct investments in the economy more profitable for foreign businessmen than regular imports.
Another important factor - the perfection of legal framework that protects the rights of investors from nationalization or discrimination, as well as the maximum economic and political stability in the country.Discrimination of foreign investors can be in the form of a special type of taxation, price controls, restrictions on the placement of orders, limited money, limited emigration of labor resources.The investment climate also loses if the country likely currency risks.
Assessing the attractiveness of a specific country for foreign investments made by means of a specific system of indicators, including more than 340 set of indicators and expert evaluations.
Today the most attractive for foreign direct investment are the United States, Canada, Germany, Switzerland, the Pacific Rim.
