Strategies Essay Example | Topics and Well Written Essays - 1750 words

Strategies - Essay ExampleFDI is often defined as an comply through and through which an entity of one parsimony tends to invest capitals in an different economy with the purpose of gaining and simultaneously providing long-run benefits to the parties involved, i.e. the direct investor, direct enthronization enterprise, and the economies on the whole (OECD, 2009). As is evident from the benchmark definition provided by OECD, FDI ordinarily means the liberty to foreign investor allowing them to set up a production unit through investment in the host demesne with the purpose to stimulate the means of production in the economy and thus enhance capital allocation (Neuhaus, 2006). It is in this context that the involvement of FDIs in the economic development of the host countries, especially in the case of growth countries has been in debate for decades. In this regard, the foremost matter to was drawn on the sovereignty of the state governments and the effects that FDIs had due t o growing influences. As stated by Schnitzer (2000), FDIs reward few significant rights to the direct investors in order to operate in the host sphere with minimal legislative barriers. This influences the monetary policies of the country which in turn affects the sovereignty of the state government as can be observed from the illustration of East European economies, e.g. Hungary, Poland, Czech and otherwises (Schnitzer, 2000). In many instances, FDIs wee-wee been witnessed to affect the sustainable development of the host country as well. It is worth mentioning that from a general tip of view FDIs are expected to provide the host country with enhanced employment opportunities thereby reducing poverty and enhancing the overall economic growth. However, it is quite important that the resource allocation is capablely distributed in the country to gain total development. But evidences have revealed that FDIs have failed in providing total benefit to the host developing economies (Velde, 2001). To be illustrated in the case of Africa, the FDIs had been recorded to increase significantly as was recorded in 2002. disdain the significant rise in inflows of FDIs in the economies, namely, Nigeria, Tunisia, Egypt, and Algeria, also recorded as the chief direct investment enterprises of the continent, the economic growth has been quite low in comparison to other economies facilitating FDIs, such as Poland, Hungary and other Western economies. The increase of corruptions, extortions and other social issues has also affected the economic growth in these countries. flimsy sustainable development can also be witnessed in the case of Latin American as well as Caribbean economies (Gardiner, 2002). FDIs have also proved to be beneficial in many instances, e.g. in the case of China. The inclusion of FDIs in the economy have rewarded with better productivity in the technology celestial sphere as well as in the case of human resource development with almost equal distribu tion of resources. China, as a developing economy had also faced the risk of sovereignty and other political, economical along with social risks which were dealt with