Professional Documents
Culture Documents
Investment
A Prerequisite to Economic
Growth?
“Comparative Examples”
vs.
“Set Thesis”
Foreign Direct Investment
Foreign investment that establishes a lasting interest in or
effective management control over an enterprise. Foreign
direct investment can include buying shares of an
enterprise in another country, reinvesting earnings of a
foreign- owned enterprise in the country where it is
located, and parent firms extending loans to their foreign
affiliates. International Monetary Fund (IMF) guidelines
consider an investment to be a foreign direct investment if
it accounts for at least 10 percent of the foreign firm's
voting stock of shares. However, many countries set a
higher threshold because 10 percent is often not enough to
establish effective management control of a company or
demonstrate an investor's lasting interest.
SO…
– This makes FDI a crucial determinant factor
of increased future growth rate of an
economy
…RIGHT???
Costs of FDI to Host Countries
Adverse effects on competition
– Petr Pavlínek
– http://eur.sagepub.com/cgi/reprint/11/1/47.pdf#search=%22FDI-Economic
%20Development%22
Legal Institutions and FDI
– WHY???