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Foreign direct investment is an ownership and control of business by an entity from a foreign state. Less developed economies need to encourage FDI in order to grow. These developing economies have a responsibility of creating an enabling environment for these foreign investors to thrive. One of the major things that these countries do is develop policies that favor FDI for example reducing the time and legal requirements needed to register and establish businesses in their states. They also may offer insentive to investors willing to invest in specific sectors in terms of reducing taxation in those sectors. Political stability is also key to any investor and mostly foreigner and thus these governments ensure that there is no violence and unlawful destruction of property. Finally an adequate social and physical infrastructure ought to be created by these governments to enhance communication.
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