Foreign-invested enterprises (FIE), as well as domestic enterprises, have both increasing benefits due to FDI’ s. Domestic enterprises provide inputs and distribution for FIE’ s. Less developed nations in Africa, Latin America, and Asia are attracted to more a highly developed country like China. China has easy access to updates in information technology, which attracts many overseas businesses. Smaller sized corporations may also choose to introduce themselves to China’ s large and growing markets. These corporations can expand globally and improve their company’ s potential by obtaining more customers to increase their profits.
Overall, it becomes more cost effective for them because they are able to reach more people for the same (or less) cost. Corporations could choose the benefit of another country’ s cost and production effectiveness. This will result in a decrease in overall costs to their company the end result is more profit. Many investors may select those countries which have less stringent government rules and regulations for private corporations. Some governments may even provide tax cuts or incentives for new businesses investing within their country. These foreign investment ventures by corporations open up countries for trade and investments.
For example, The North American Free Trade Agreement (NAFTA) eliminated the trade and investment barriers between Canada, the United States, and Mexico. During the 1980s, China and India signed an agreement to further develop their economic and trade relations. During the early 1990s, China focused on liberalizing its policies regarding FDI’ s and trades. This opened up more interaction and investments between China’ s neighboring countries. Still, many countries have stringent policies and choose not to allow as much freedom for outside investments. FDI’ s may be most beneficial for newly developing countries because it will bring more financial capital to their economy.
It can improve their Gross Domestic Product (GDP), and its overall investments for that country. It can rejuvenate a countries economy by increasing the employment rate, raising salaries, and improving its waning market areas. (Gardiner, 2000.).
Please type your essay title, choose your document type, enter your email and we send you essay samples