The Impact of Inward FDI on Host Countries Essay

The Impact of Inward FDI on Host Countries - Essay Example Discussion The impacts of inward FDI on host countries Transfer of resources Inward FDI has various effects on host countries. Grimwade (2000) indicates that inward FDI has the effect of transferring resources whereby resources such as technology, capital and management are transferred during investment. Capital transfer increases the capital stock in a host country while the transfer of management leads to the improvement of management skills in this country. Moreover, during transfer of resources, host countries may benefit from new technologies from the foreign investors. Overall, the transfer of the aforementioned elements leads to an increment in the host country’s productive potential as it leads to the increase of the Gross Domestic Product (GDP). Host countries have witnessed substantial economic growth due to FDI. This growth, alongside other benefits, has heavily depended on various factors. The multinational corporations in host countries have raised funds in these countries through bank loans, issuing shares or issuing bonds to the investors in these countries. However, such a move has not yielded the result of transfer of capital and it has instead pushed the costs of raising capital for the firms in the host countries. ... (2004) indicate that some MNCs from industrialized countries have introduced capital-intensive methods in countries that require labor-intensive methods owing to abundance in labor there. Furthermore, management skills and technologies brought to the host countries may have a little benefit to their economy in case they are not passed on to the employees in the local firms. Balance of payments and trade Buckley and Casson (2002) reveal that through inward FDI, host nations have been able to enjoy positive effects on their balance of payments in the short run. The inflow of foreign capital has benefited the capital account of balance of payments, with the current account improving due to a decrease in imports or an increase in exports. Foreign companies also face the need to import various parts and components from their parent companies during their early stages. Moreover, there is a possibility of large inflows emanating from the foreign countries pushing the exchange rates, which r enders the exports less lucrative and increases competition. Appreciation in the exchange rates may have the effect of attracting speculative capital inflows, which may push the rate further and lead to its overshooting. In case the central bank wants to prevent the rise of the rate through selling currency to foreign money holders, there will be an increase in the supply of money, which culminates into inflation. In the end, there will be an outflow of FDI when the parent companies are paid dividends and interest payments (Jones, 2005 ). Employment Dicken (2007) highlights that inward FDI has the effect of increasing employment in the host countries. This is a direct effect of FDI as the foreign firms in these countries are able to employ workers who might not have attained any form of

Comments Assignment Example | Topics and Well Written Essays - 500 words

Comments - Assignment Example All points were on target as to the thesis, but a bit more explanation could possibly be given as to how children constitute a different culture than adults – this is not what Pratt meant when she talked about culture, so explaining the relationship as a cultural one might be a good opening paragraph. The most convincing parts were ones that helped the reader empathize with the children, and recognize that the practice is not harmless. As mentioned before, defining how children constitute a culture could use a good deal more development. Furthermore, I think it is possible that more concrete examples might have been useful – this assumes that everyone’s thanksgiving practices are the same, but indicating where these impressions emerge from might be useful – is it movies about holidays? Personal experience? Etc. The introduction was one of the best parts of the essays, because it connected Pratt’s ideas to everyday practices, like dining. This essay’s thesis is essentially that finding your way into contact zones, or learning to embrace the, can be a valuable experience and one that people should not avoid. The essay is organized largely as a personal narrative, describing the beginning in a contact zone – coming into a situation as a freshman where she felt very uncomfortable, and the subsequent development of comfort in that arena and the eventual satisfaction of forming satisfying life-long relationships, and making an incredibly successful field hockey team, with people that she at first felt uncomfortable with. This organization makes sense, but it is easy to get lost in the narrative and perhaps breaking it up into smaller paragraphs to highlight turning points would make it a much more readable essay. Most of the points were generally on place with the thesis, because this is a personal essay talking about how emerging into a difficult new