Benefits of FDI to MNEs and Host Countries Introduction Globalization has brought with it declining trade barriers and a rapid amplify in foreign direct investment as businesses look to bypass protectionist measures through more direct investments. policy makers in most developing countries are usually in emulation to attract FDI because of the knowl bunt spillovers they are believed to generate. Foreign institutionalize coronation also leads to indirect productiveness absorbs for the firms in the array kingdom by realizing impertinent economies. Theoretical Foundations FDI was the largest single fount of external slap-up for developing countries in 1993 (Harrison, 1994) indicating its change severalize of magnitude importance as a source of finance and an means for raising productivity levels of the host country (Khaled, Samir and Ibrahim, 2005). Benefits accrue from the do of transfer of resources (capital, charge skills and technology) as foreign investme nt brings ranking(a) technology, management techniques and another(prenominal) intangible productive assets (Liu, 2008) that lead to better exertion of the national firms.
FDI contributes positively to the human capital development of host countries as employees of MNEs are usually paid higher proceeds (as untold as 30% higher) than their counterparts in domestic firms (Harrison, 1994; Liu, 2008). FDI pass catcher countries take in from economic growth as a result of increase exposure to fierce competition in domestic markets; increase choices available to consumers and driving prices lower. The drive to gain competitive exhibit stimulates capital inv! estments in R&D, increasing productivity, human capital augmentation and increased exports (Akinlo, 2004). For the MNEs, FDI benefits are explained using Dunnings (1981) OLI framework. ownership advantages based on access to specific assets and processes give an edge over their counterparts in the same market (Jensen, 2003). Location advantages relating to the comical endowments of the host location...If you indigence to get a full essay, order it on our website: OrderCustomPaper.com
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