FOREIGN DIRECT INVESTMENT

Foreign Direct Investments

Name of Writer

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Table of Contents

Introduction3

Discussion4

Kinds of FDI4

Determinants of the FDI4

Theoretical Framework6

Dunning is Eclectic Paradigm6

Analysis and Discussion8

Conclusion9

References10

Foreign Direct Investments

Introduction

Foreign direct investments (FDI) interest (10 percent or more of the voices of the camp) refers to the net influxes of investments to a lasting management in an enterprise, in another economic area that the investor is to be acquired. The sum from company capital, other long-term capital and short-term capital than in the balance of payments is shown. It encloses as a rule of participation in management, Opportunity of the society, the transfer of technology and certificate. There are two kinds of FDI: foreign direct investments.

The United Kingdom has seen a clear rise in inwards and outswards investments in since the entry to the EU. Investments are an important factor for the economic growth, and can during Foreign Direct investment (FDI) a small element of the internal investments is the capital of one economy, use for growth and employment - in 2004 to extend the creation of new investments, 39,592 jobs in the rivers of the United Kingdom to the turnover of capital between the member states should go to restructure and to create with it the rearrangement of money to a more efficient whole-European market structures.

In addition, FDI can do a useful instrument for the transfer of new and innovative technologies and processes, and can to internal enterprise connection about the Spillover effects to raise the productiveness the industry and the broader economy work. Moreover, FDI does not only provide support to the companies that look forward to invest in other countries, but also help the economy of the host country as well as the economy of the home country of the company.

Discussion

Kinds of FDI

The foreign investments in a national economy can do either horizontally - to stamp in enterprise the foundation of a subsidiary or establishment in another land into a market in which - or to win vertically - in the enterprise opposed to different stages of production in other lands after comparative advantage. How often as a horizontal investment is a substitute with trade because foreign direct investments are substituted exports, while vertical investment will export in addition for trade, like multinational enterprises (MNC), components to the foreign subsidiaries and then Re export of the produced goods. FDI can be dripped either the "green field" investments, become where a new enterprise or work as a host country or by coalescences and takeovers where the possession of existing enterprises will transfer (Driffield, 2004).

Determinants of the FDI

Although this will change the relative meaning single between the different sectors, the most important theoretical determinants are summarized by FDI in the newer literature as follows:

Access to the markets / carriage - enterprises decides to take on horizontal investment and to sit down in a market where the costs for the exportation to a market are high. Indeed, the vertical investment is developed to discourage the spring between productions more cheap. The enterprises which decide more turnovers there ...