Question

1. Using real world examples, discuss why a host country might promote or restrict foreign direct investment.

2. Using real world examples, discuss why a home country might support or discourage outgoing foreign direct investment.

Answer 1

Part A

The host countries may encourage and restrict foreign direct investment. The restriction, In many examples, governments look to restrain or control foreign direct investment to protect local enterprises and key resources (oil, minerals, and so forth.), safeguard the national and local culture, secure sections of their domestic population, keep up political and economic autonomy, and oversee or control economic growth. the important restriction tools are ownership restrictions and tax rates and sanctions.

They encourage, Governments look to advance FDI when they are anxious to extend their domestic economy and pull in new technology, business know-how, and capital to their nation. In these examples, numerous legislatures despite everything attempt to oversee and control the sort, quantity, and even the nationality of the FDI to accomplish their domestic, economic, political, and social objectives.

Part B

Home countries (those from which international organizations dispatch their investments) may likewise try to empower or dishearten surges of FDI for an assortment of reasons. Yet, home countries will, in general, have fewer concerns since they are regularly prosperous, industrialized countries. For these nations, an outward investment only here and there nationally affects the effect on creating or developing countries that get the FDI. The reason behind to restrict outward FDI is,

A. Putting resources into different countries sends assets out of the nation of origin accordingly, fewer assets are utilized for improvement and economic development at home. Then again, benefits on resources abroad that are getting back increment both a nation of the balance of payments and its accessible resources.

B. Active FDI may eventually harm a country's balance of payments by replacing its exports. This can happen when an organization makes a creative production in a market abroad, the yield of which replaces exports out that used to be sent there from the nation of origin.

C. employment coming about because of outgoing investments may supplant employments at home-This is regularly the most petulant issue for home nations. The migration of production to a low-wage country can strongly affect a district or locale. Be that as it may, the effect is once in a while national, and its belongings are frequently quieted by other openings for work in the economy. What's more, there might be a counterbalancing improvement in home nation business if extra fares are expected to help the movement spoke to by the active FDI.