Direct Investment Term Paper:
Foreign direct investment is the form of investment of money of the one country into the development of the company of another company with the purpose to receive high profit. There are many types of foreign direct investment which differ on the basis of their principles but their result is the same – profit. The most popular type of foreign direct investment is the creation of the branch of the company in another country. It is obvious that the company has to pay all the expenditures connected with the rent of the place, building and supply with energy itself. The country which allowed to build a branch company on its territory is in the advantage, because the people will be provided with workplaces and the money of their salaries will supply the budget.
Another way of foreign direct investment is the absorption or the purchase of the foreign business.
As a result the whole responsibility is placed on the shoulders of the company which has become the new owner of the business. Quite a popular type of foreign direct investment is the purchase of the rights on the usage of the know-how and technologies. Generally, foreign direct investment is used in the developing countries, which accept all kinds of investment gladly. The USA is considered to be the greatest investor and more than the half of the world’s foreign direct investment belongs to it.
If one has chosen to research the topic on foreign direct investment, he should devote much time to reading. A student should find high-quality sources and collect the required data for the research, which will help him understand the principles, the structure and the nature of foreign direct investment. It is important to realize the main types of foreign direct investment and the methods which are used to fulfill it. In order to catch the principle of its work a student can investigate the topic on the basis of the direct example from the real life observing and analyzing the investment of a certain country into the economics of another one. On the basis of the research one will be able to express his point of view concerning the importance and the value of foreign direct investment for the global economics.
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