Foreign direct investment, or FDI for short, has become a cornerstone for both

governments and corporations. By acquiring a controlling interest in foreign assets,

corporations can quickly acquire new products and technologies, as well as sell their
existing products to new markets. And by encouraging foreign direct investment,
governments can create jobs and improve economic growth.

For international investors, foreign direct investment plays an extremely important role.

The growth of emerging markets has been due in large part to incoming foreign direct
investment. At the same time, companies investing abroad can realize higher growth rates
and diversify their income, which creates opportunities for investors.

Some key benefits of foreign direct investment include:

 Economic Growth. Countries receiving foreign direct investment often

experience higher economic growth by opening it up to new markets, as seen in
many emerging economies.

 Job Creation & Employment. Most foreign direct investment is designed to

create new businesses in the host country, which usually translates to job
creation and higher wages.
 Technology Transfer. Foreign direct investment often introduces world-class
technologies and technical expertise to developing countries.

However, there are also a few drawbacks:

 Strategic Industries. Many countries protect certain strategic industries, like

defense, from foreign direct investment in order to maintain control from foreign
entities.
 Long-term Capital Movement. Some critics argue that once a foreign investment
becomes profitable, capital really begins to flow out of the host country and to
the investor's country.
 Disruption of Local Industry. There is some concern that foreign direct
investment may disrupt local industry and economies by attracting the best
workers and creating income disparity.

For international investors, seeking out investments in countries with sustainable and
growing foreign direct investment is a popular strategy. These levels can be found on
websites like the United Nations Conference on Trade and Development (UNCTAD).
Foreign Direct Investment and International Investing

Foreign direct investment also plays an important role on a microeconomic level.

Domestic companies that expand into foreign markets can realize significant growth.
Moreover, exposure to more than one country also enhances diversification. On the flip
side, foreign companies operating in emerging markets can be targets for foreign direct
investments themselves, creating opportunities for investors.

One great example of a successful foreign direct investment is Suzuki Motor Company's
joint venture in India through Maruti Suzuki India Limited. Since the joint venture was
created, the company has become a market leader in India's automobile industry. And
Suzuki's majority ownership stake has since provided it with billions in profits over the
years.

Here are some tips for investing in companies active in foreign direct investments:

 Be Wary of Regulations. Some countries regulate how much control foreign

corporations and investors can have in their domestic companies. For instance,
China's joint ventures with foreign companies are notorious for their structural
complexity.
 Be Aware of the Risks. Mining and energy joint ventures in particular are very
popular in somewhat unstable regions in the Americas and Africa. Investors
should be aware of the risk of nationalization, political conflicts and other
potential problems that may arise.

 Diversification is Best. Companies that are involved in foreign direct investment

across a number of different regions around the world offer greater diversification.

Foreign direct investment is an investment in a

business by an investor from anther country for

which the foreign investor has control over the

company purchased.

It is also defined as cross border investment made

by a resident in one economy in an enterprise in

another company.

A legal entity is any business organization that is legally permitted to enter into a contract, including a contract
for the purchase, sale, or lease of real property. Legal entity interests may be owned individually, owned by
another legal entity, or held in trust. Some of the most common legal entities holding title to real property in
California are:
R&D (Research and Development) investigative activities that a business chooses to conduct with the
intention of making a discovery that can either lead to the development of new products or procedures, or
to improvement of existing products or procedures. Research and development..

A portfolio investment is a grouping of assets such as stocks, bonds, and cash equivalents. Portfolio
investments are held directly by an investor or managed by financial professionals.
In economics, foreign portfolio investment is the entry of funds into a country
where foreigners deposit money in a country's bank or make purchases in the
country’s stock and bond markets, sometimes for speculation.[1][2]
Portfolio investments typically involve transactions in securities that are highly liquid, i.e. they can be
bought and sold very quickly. A portfolio investment is an investment made by an investor who is not
involved in the management of a company. 
 FDI flow growing faster than world trade and world output

 lag·ging
 [ lag-ing]


 NOUN
 1.
 the act of falling or staying behind.

Top 25 Developed and

Developing Countries
By Investopedia | September 28, 2016 — 2:09 PM EDT

 SHARE
 

The primary factor used to distinguish developed countries from developing

countries is gross domestic product (GDP) per capita, a figure calculated by
dividing a country's GDP by its population. For example, a small country with a
GDP of $1 billion and a population of 50,000 has a GDP per capita of $20,000.
One unofficial threshold for a country with a developed economy is a GDP per
capita of $12,000. Some economists prefer to see a per capita GDP of at least
$25,000 to be comfortable declaring a country as developed, however. Many
highly developed countries, including the United States, have high per capita
GDPs of $40,000 or above.

Country
Argentina Developing
Australia Developed
Brazil Developing
Canada Developed
Chile Developed
China Developing
France Developed
Germany Developed
Greece Developed
Israel Developed
Italy Developed
Malaysia Developing
Mexico Developing
Netherlands Developed
Nigeria Developing
North Korea Developing
Norway Developed
Philippines Developing
Qatar Developing
Russia Developing
South Korea Developed
Spain Developed
 Sweden Developed
Taiwan Developed
Turkey Developed
 

Differences Between Developed and Developing

Countries
 

Exceeding even the $12,000 GDP does not automatically qualify a country as
being developed. Developed countries share several other characteristics: 

 They are highly industrialized.

 Their birth and death rates are stable. They do not have excessively high
birth rates because, thanks to quality medical care and high living
standards, infant mortality rates are low. Families do not feel the need to
have high numbers of children with the expectation that some will not
survive. No developed country has an infant mortality rate higher than 10
per 1,000 live births. In terms of life expectancy, all developed countries
boast numbers greater than 70 years; many average 80.
 They have more women working, particularly in high-ranking executive
positions. These career-oriented women frequently choose to have smaller
families or eschew having children altogether.
 They use a disproportionate amount of the world's resources, such as oil.
In developed countries, more people drive cars, fly on airplanes, and
power their homes with electricity and gas. Inhabitants of developing
countries often do not have access to technologies that require the use of
these resources.
 They have higher levels of debt. Nations with developing economies
cannot obtain the kind of seemingly bottomless financing that more
developed nations can.

Another measuring device: the human development index (HDI), developed by

the United Nations as a metric to assess the social and economic development
levels of countries. It quantifies life expectancy, educational attainment and
income into a standardized number between 0 and 1; the closer to 1, the more
developed the country. No minimum requirement exists for developed status, but
most developed countries have HDIs of 0.8 or higher.

It's important to remember no set minimums or maximums exist for these

metrics. Economists look at the totality of a country's situation before rendering
judgment, and they do not always agree on a country's development status. For
example, countries such as Mexico, Greece and Turkey are considered
developed by some organizations and developing by others.

That being said, here is a list that defines the generally agreed-upon status –
developed or developing – of 25 countries around the world.

Argentina
Argentina is a developing country, even though it ranks higher than the vast
majority of non-developed countries in most metrics.

Read more: Top 25 Developed and Developing Countries |

Investopedia https://www.investopedia.com/updates/top-developing-
countries/#ixzz57OdaRC1k 
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Häagen-Dazs /ˌhɑːɡənˈdɑːs/ is an American ice cream brand, established by Reuben and Rose

Mattus in the Bronx, New York, in 1961. Starting with only three flavors: vanilla, chocolate,
and coffee, the company opened its first retail store in Brooklyn, New York, on November 15, 1976.
[1]
 The business now has franchises throughout the United States and many other countries around
the world including the United Kingdom, India, China, Lebanon and Brazil. [2]
The company also produces ice cream bars, ice cream cakes, sorbet, frozen yogurt, and gelato.[3]
Operating multiple plants helps the multinational to ‘soften’ the effect on wages and
hence it benefits from operating multiple plants. For example, if the production level
affects only the wage rate in the foreign market, a certain amount of exporting to the
foreign market helps to reduce the wage rate in the foreign country.
Hence, the trade-off between the cost of exporting and the benefit of wage reduction
determines the best production strategy of the multinational.

First, the nature of the e§ect depends critically on the speciÖc motives to invest abroad. While high
transportation costs may promote the incentive to replicate production across countries

The Product Life Cycle Theory is an economic theory that was developed by Raymond Vernon in
response to the failure of the Heckscher-Ohlin model to explain the observed pattern of international
trade. The theory suggests that early in a product's life-cycle all the parts and labor associated with
that product come from the area where it was invented. After the product becomes adopted and
used in the world markets, production gradually moves away from the point of origin. In some
situations, the product becomes an item that is imported by its original country of invention. [1] A
commonly used example of this is the invention, growth and production of the personal
computer with respect to the United States.

The eclectic paradigm is a theory in economics and is also known as the OLI-Model or OLI-

Framework.[1][2] It is a further development of the internalization theory and published by John H.
Dunning in 1979.[3]

 Ownership advantages[1][2] specific advantages refer to the competitive advantages of the

enterprises seeking to engage in Foreign direct investment (FDI). The greater the competitive
advantages of the investing firms, the more they are likely to engage in their foreign production. [4]
 Location advantages [5][2] Locational attractions refer to the alternative countries or regions,
for undertaking the value adding activities of multinational enterprises (MNEs). The more the
immobile, natural or created resources, which firms need to use jointly with their own competitive
advantages, favor a presence in a foreign location, the more firms will choose to augment or
exploit their O specific advantages by engaging in FDI. [4]
 Internalization advantages[2] Firms may organize the creation and exploitation of their core
competencies. The greater the net benefits of internalizing cross-border intermediate product
markets, the more likely a firm will prefer to engage in foreign production itself rather than
license the right to do so.[4]

clearly, multinational corporations canprovide developing countries with

critical financial infrastructure for economic and socialdevelopment.
However, these institutions may also bring with them relaxed codes
of ethicalconduct that serve to exploit the neediness of developing nations,
rather than to provide thecritical support necessary for countrywide
economic and social development.When a multinational invests in a host
country, the scale of the investment (given the sizeof the firms) is liely to
be significant. !ndeed governments will often offer incentives tofirms in the
form of grants, subsidies and tax breas to attract investment into
theircountries. "his foreign direct investment (#$!) will have advantages and
disadvantages forthe host country

If compared to the analysis of the effects of inward FDI (i.e. the host country effects), the home country
effects of FDI have been researched to lesser extent. Still, this issue has provoked significant interest by
the policy makers in advanced countries. Outward FDI (OFDI) has been blamed often (very often with no
reason) for adverse effects on home economy, incl. for example the argument of exporting jobs. The
studies that discuss the effects of FDI in its home country 3 focus their analysis overwhelmingly on the
effects on the investing parent firm 4 (on its employment, output, exports and productivity). In their
recent publication, Barba Navaretti, Venables et al. (2004) stress that so far the spillovers of FDI in the
home country of the investor are mostly left out from analysis and this gap needs to be closed soon. The
aim of this paper is to study and compare the effects of both inward and outward FDI on productivity of
firms. The main novelty of our study is the analysis of the spillover effects of outward foreign direct
investment that may occur outside the investing firms on the rest of the home country. Another novelty
is concentrating on both the effects in manufacturing and services sector. Most of former studies
(except e.g. Griffith et al. 2004 on UK) still consider effects of FDI only in manufacturing sector.

host country - foreign country where the company invests

home country - when companys HQ is and where the company came from.