Effects of Foreign Direct Investment Essay Example for Free

Effects of irrelevant Direct Investment EssayThe possible despotic and oppose make of FDIinflowsIng. Tom Dud, PhD.Possible positive effectsFDI provides capital which is unremarkably missingin the target fieldLong term capital is suit satisfactory for stintingdevelopment contrary investors atomic number 18 able to finance theirinvestments projects better and often cheaperForeign corporations create new workplacesPossible positive effectsFDI bring new technologies that are plebeianlynot available in the target country.There is trial-and-error evidence that there are spillover effects as the new technologies usually spread beyond the distant corporationsForeign corporations provide better access to outside(prenominal) commercialisesEx. Foreign corporations can provide usefulcontacts crimson for their domestic subcontractorsPossible positive effectsForeign corporations bring new know-how andmanagerial skills into the target countryA assoil, there is a spill-over effects as p eople leave the corporations they leave with the knowledge and know-howthey accumulatedForeign corporations can help to change the economicstructure of the target countryWith a good economic strategy governments can attractcompanies from promising and innovative areasPossible positive effectsCrowding in effectThe foreign corporations often bring additionalinvestors into the target country (ex. their usualsubcontractors)Foreign corporations meliorate the businessenvironment of the target countryEthical business or rules of conductPossible positive effectsForeign corporations bring new cleantechnologies that help to improve theenvironmental conditionsForeign corporations usually help increase thelevel of wages in the target economyForeign corporations usually founder a positiveeffects on the trade balancePossible banish effectsForeign corporations may buy a local companyin order to shut it down (and gain monopolyfor example)Crowding out effectWe can see this effect if the foreign corporationstarget the domestic market and domesticcorporations are not able to compete with thesecorporationsPossible negative effectsForeign corporations may cut workingpositions (privatization deals or MAtransactions)Foreign corporations have a tendency to usetheir usual suppliers which can lead toincreased imports (no problem if theproduction is export driven)Possible negative effectsRepatriation of the wampum can be stressful on thebalance of paymentsThe high growth of wages in foreign corporationscan influence a similar growth in the domesticcorporations which are not able to cover this growthwith the growth of productivityThe result is the decreasing competitiveness of domesticcompaniesPossible negative effectsMissing tax revenuesIf the foreign corporations receive tax holidays orsimilar provisionsThe branch of a dual economyThe economy will contain a developed foreignsector and an underdeveloped domestic sectorPossible negative effectsPossible environmental damage motivat or tourism