Foreign Private Investment

Paper Summary:

This paper discusses the nature of foreign private investment as seen in the actions of multi-national enterprises and other entities as they open plants in foreign countries and invest capital and expertise in these operations. The paper considers the advantages and disadvantages of such investment and some of the reasons it has been increasing in the new global economy.

From the Paper:

"Foreign Direct Investment (FDI) is a major process of transferring capital, technology and other business benefits from the developed world to the underdeveloped world today, as well as from all parts of the world into any economy in which investors want to put their money for the benefit of that economy and the investors themselves. Some such investment is made by governments, some by major economic institutions such as the World Bank and the IMF and by companies choosing where to place their operations for the future. Foreign private investment occurs when companies or individuals make such investments. Making such investments has advantages which attract investors, but the process can also have disadvantages which potential investors need to remember. FDI "is conventionally defined as a form of international inter-firm co-operation that involves significant equity stake and effective management decision power in, or ownership control of, foreign enterprises" (Luiz 2)."

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