Fdi MBA

[pooja]

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I want to know the Foreign Direct Investment FDI for MBA so will you please tell me?

[pawan]

Foreign Direct Investment FDI is the practice of international businesses investing in countries other than their home country.

It refers to an investment made by a foreign individual or a company in the productive capacity of another country.

It can be considered as the movement of capital across national frontiers in a manner that allows the investor to have a control over the investment.

Firms that provide FDI are referred to as MNCs.

FDIs can be broadly classified into two types: outward FDIs and inward FDIs.

This classification is based on the types of restrictions imposed, and the various prerequisites required for these investments.

An outward-bound FDI is backed by the government against all types of associated risks.
This form of FDI is subject to tax incentives as well as disincentives of various forms.


Benefits of Foreign Direct Investment-

Growth of capital stock
Incorporated technologies
Possibilities to gain managerial and labor skills
Higher incomes and economic development. (Taxation for public sector)
- Finance education
- Finance health
- Finance infrastructure development, etc.
- Resource -transfer
- Employment
- Balance-of-payment (BOP)
* Import substitution
* Source of export increase


Costs of Foreign Direct Investment

Adverse effects on the BOP
- Capital inflow followed by capital outflow + profits
- Production input importation

Threat to national sovereignty and autonomy
- Loss of economic independence