Main Determinants of Foreign Direct Investment (FDI) Location and Strategies employed by Transnational Corporations to maximise the net advantages of their locational decisions.
Introduction:
In the past few decades, the most important development has been of increasing internationalisation and globalisation of economic activities. Internationalisation is not a new thing, some commodities have been traded internationally since centuries, however the production process (plant, firm and industry) was always organised within the national economies. Today the world economy has changed dramatically, whereas a few centuries ago only a few products were traded internationally today, everything one can imagine of is involved in international trade. Production processes are no longer restricted by national boundaries, firms are setting up productive facilities overseas through Foreign Direct Investment. The most important indicator of the changing global map is Foreign Direct Investment. (Dicken, 1998)
FDI plays a significant and key role in global business. Companies may choose FDI as way to enter new markets and provide access to new marketing channels, cheaper production facilities, new technology, skilled labour force and finance. It is not only beneficial to the firm investing, but also the host receiving investment benefits from it through the transfer of capital, new technology and management skills and as such can provides a strong boost for economic development.
As per FDI Daniels, et.al. (2004) FDI can be defined as, a direct investment which gives the investor a controlling interest in a foreign company also known as FDI. It does not include portfolio investment as it is considered as indirect investment. Over time the definition of FDI h ...