Friday, January 29, 2010

Foreign Direct Investment

FDI – the short form of foreign direct investment. After globalisation that is particular company in a country can open their branch in any part of the world, many investors looking to invest their capital to any one of the country which has emerging market. The reason behind this investment is that it is easy to get the labour force for less cost compare to some developed countries. It is also easy to get some skilled labour for cheaper cost. There are some advantages and disadvantages associated with this investment; the main advantage is getting employment. If a country gets more investment from abroad, it will develop more industry in their nation which in turn gives employment to the public. And one more fact is that the foreign currency in a market, they can able to diversify the market.

The market diversification is the biggest term and it needs lots of explanation. One country may be familiar in a particular industry but it may not able to get success in another industry. This country’s economy is not diversified, it depends on only one industry where as some other country has very good workforce but not much capital to use their work force. In this case FDI gives better option to go, it needs to attract more and more foreign investors. So that it can able to diversify the economy.

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