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[ T y p e t h e c o m p a n y a d d r e s s ]
Prita Nanda Utami
Tenny Yanutriana
Group
4
FOREIGN DIRECT INVESTMENT

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Foreign Direct Investment
Definition
Foreign direct investment (FDI) plays an extraordinary and growing role in global
business. It can provide a firm with new markets and marketing channels, cheaper
production facilities, access to new technology, products, skills and financing. For a
host country or the foreign firm which receives the investment, it can provide a
source of new technologies, capital, processes, products, organizational technologies
and management skills, and as such can provide a strong impetus to economic
development.
Foreign direct investment, in its classic definition, is defined as a company from one
country making a physical investment into building a factory in another country. The
direct investment in buildings, machinery and equipment is in contrast with making a
portfolio investment, which is considered an indirect investment. In recent years,
given rapid growth and change in global investment patterns, the definition has
been broadened to include the acquisition of a lasting management interest in a
company or enterprise outside the investing firm’s home country. As such, it may
take many forms, such as a direct acquisition of a foreign firm, construction of a
facility, or investment in a joint venture or strategic alliance with a local firm with
attendant input of technology and licensing of intellectual property.
In the past decade, FDI has come to play a major role in the internationalization of
business. Reacting to changes in technology, growing liberalization of the national
regulatory framework governing investment in enterprises, and changes in capital
markets profound changes have occurred in the size, scope and methods of FDI. New
information technology systems, decline in global communication costs have made
management of foreign investments far easier than in the past. The sea change in
trade and investment policies and the regulatory environment globally in the past
decade, including trade policy and tariff liberalization, easing of restrictions on
foreign investment and acquisition in many nations, and the deregulation and
privatization of many industries, has probably been the most significant catalyst for
FDI’s expanded role.

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 Definition Foreign direct investment (FDI) plays an extraordinary and growing role in global business. It can provide a firm with new markets and marketing channels, cheaper production facilities, access to new technology, products, skills and financing. For a host country or the foreign firm which receives the investment, it can provide a source of new technologies, capital, processes, products, organizational technologies and management skills, and as such can provide a strong impetus to economic development.   Foreign direct investment, in its classic definition, is defined as a company from one country making a physical investment into building a factory in another country. The direct investment in buildings, machinery and equipment is in contrast with making a portfolio investment, which is considered an indirect investment. In recent years, given rapid growth and change in global investment patterns, the definition has been broadened to include the acquisition of a lasting management interest in a company or enterprise outside the investing firm’s home country. As such, it may take many forms, such as a direct acquisition of a foreign firm, construction of a facility, or investment in a joint venture or strategic alliance with a local firm with attendant input of technology and licensing of intellectual property. In the past decade, FDI has come to play a major role in the internationalization of business. Reacting to changes in technology, growing liberalizat ...
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