What is foreign investment How does it benefit the host country?
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AbstractForeign direct investment may promote economic development by helping to improve productivity growth and exports in the multinationals'host countries, the authors conclude, after reviewing the empirical evidence. But the exact relationship between foreign multinational corporations and their host economies seems to vary between industries and countries. Multinational corporations mainly enter industries where barriers to entry and concentration are relatively high, and at first they increase the number of firms in the host country market. In the long run, they may contribute to a more concentrated market, although efficiency may improve, especially if protection does not guarantee an easy life for the multinational affiliate. However, most available evidence has to do with multinationals'entry into host countries'industries rather than with their presence -the dynamic aspects of multinationals'relationship to their competition in host country markets. Most evidence on multinationals'effects has to do with effects in industrial countries, and it is impossible to disregard the risk that the multinationals'entry into developing countries may replace local production and force local firms out of business, rather than force them to become more efficient. Suggested CitationHandle: RePEc:wbk:wbrwps:1745 Download full text from publisherReferences listed on IDEAS
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What is foreign investment and how does it help an economy?Key Takeaways. Foreign investment refers to the investment in domestic companies and assets of another country by a foreign investor. Large multinational corporations will seek new opportunities for economic growth by opening branches and expanding their investments in other countries.
What is foreign direct investment and how does it help the Philippines?Policies Towards Foreign Direct Investment
The Philippines seeks foreign investment to generate employment, promote economic development, and contribute to sustained growth. The Board of Investments (BOI) and PEZA are the lead investment promotion agencies (IPAs).
Which form of foreign investment is more beneficial for the economy of host country?Foreign direct investment offers advantages to both the investor and the foreign host country. These incentives encourage both parties to engage in and allow FDI. Below are some of the benefits for businesses: Market diversification.
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