Foreign direct investment Essay Example | Topics and Well Written Essays - 500 words

Foreign direct investment - Essay Example Foreign direct investment refers to a direct investment into production or business within a country by an entity in another country, either by purchasing a company within a target country, or by broadening operations of a present business within that country. The reasons that may make exporting unfeasible include cheaper producing abroad, reducing transportation costs, lack of domestic capacity such as when demand exceeds the capacity, the need to alter products and services, trade restrictions, and country of origin effects (OECD 57). There are three critical reasons for entities to seek a controlling interest; internalization theory (self-handling of operations), appropriation theory (denying rivals or potential rivals access to resources such as trademarks, capital, patents, and management know-how), and freedom to seek global objectives (participate in global or transnational strategy) (Nicholls 42). Reasons for buying existing operations entail avoiding start-up problems, getti ng an immediate cash flow instead of tying up capital, and gaining easier financing. Overall, the motives for collaborative arrangements entail to spread and reduce costs, specialize within distinct competencies, avoiding or counter competition, learning from other companies (gain knowledge), and securing vertical and/or horizontal linkages. The international motives for undertaking collaborative arrangements encompass aspects such as gaining location-specific assets, diversifying geographically, overcoming governmental constraints, and minimizing exposure in risky environments (Nicholls 44). Companies utilize equity and non-equity arrangements that can range from wholly owned subsidiaries, equity alliances, licensing, franchising, management contracts, turnkey operations, and joint ventures. Foreign direct investment is perceived as a means of enhancing the efficiency with which the world’s scarce resources are employed. Foreign direct investment

Annotated Bibliography and Structure Essay Example | Topics and Well Written Essays - 1250 words - 3

Annotated Bibliography and Structure - Essay Example Since, it has yielded to poverty in some states whereas the influential continue enriching themselves in the name of interdependence especially through trade. Philippe in this broadcasting addresses the issue of global insufficiency and other critical issues regarding anti globalization. This is a reliable source meant to support current global arguments regarding their perception towards globalization and its effects. This is especially in India where presently, local activists are against the idea of globalization, which is contrary to the US. Thomas in this article highlights three key misrepresented aspects, which the movements have habitually evaded. They include economic liberalization, traditional economic function erosion and undying aspect of capitalism, which are detrimental to the third world regions. The study unveils how the movement despite attaining full support from its member states, instead results to evading their grievances. Consequently, this worsens its members’ economical conditions. The source’s content is essential especially in supporting arguments regarding the movement’s flaws and selective merits enjoyed by its few states. The source encompasses researches meant to test claims by diverse economists and world leaders regarding the end of globalization. In this reference, both Held and McGrew term these claims as â€Å"premature† owing to numerous systems, which global states share besides disagreements concerning whether to continue with the present interdependence. This source is extremely essential, whereby its diverse researches regarding international economic systems will support continual existence of globalization. Since, it acts as a source of global unity and interdependence that enable less privileged states to stabilize their wealth. Popescu and Costache highlight the key anti globalization movement’s grievances and