Foreign direct investment Research Paper Example | Topics and Well Written Essays - 1000 words

Foreign direct investment - seek Paper ExampleLastly, the paper winds down with a thorough discussion of the political and economic reasons that testify organisation activitys need to intervene in the international trade. Foreign Direct Investment In every providence, the politics of any given state of matter defines the benchmark of political, social and economic leadership of that particular country. Government strategizes and sets ratified mechanisms intended to drive the given country into ultimate prosperity. Economy is one of the most essential tools apply by potential political contestants and prevailing governments to maintain and construct leadership by use of their person economic policies. The direction of economic policies chosen by a government determines the nature of international relationships enjoyed with different nations to be affected by the set policies. Foreign Direct Investment (FDI) is one aspect of the economy that is capable of dictating the ina ppropriate relationship to be enjoyed between or among partnering nations. Foreign Direct Investment occurs when a given business institution from a given country opens or transfers its outgrowths to an otherwise foreign country (Kuepper, 2012). The main advantages of FDI are creation of new job opportunities for the host or receiving economy, and increase in tax margins received by the host government. FDI carries with it integrated technology and technical experts to the host country, which is usually in the class of developing countries. Despite its advantages, FDI being a form of investment from another country, tend to frame a lot of discomfort on the recipient economy if not regulated. Kuepper (2012) indicates that one of the fears necessitate governments intervention revolves around the fate of the domestic industries in the face of foreign direct investment. It is a normal practice in business that for any new entrant to survive in the foreign market, it has to offer its g oods and services at relatively lower prices than the existing firms. The new entrant may as well as have to enhance the quality of its products and services to compete the existing ones to an extent of leading to closure of the topical anesthetic firms. These possible practices pose significant threats to the domestic firms, which justifies the role of government to set sustainable policies to foresee evenhanded sharing of the market and raw materials to the benefit of the entire economy. Technology, trademarks and patent rights are of great essential to the operation of any world class or highly innovative firm. Foreign firms lobbying for FDI may prove dubious when it comes to technological leaks, breach of patent rights and misuse of established trademarks. To cushion the domestic firms from the negative effects of FDI, governments involvement in the FDI give play a great role as it will help in protecting and defending the local firms. In addition, FDI are known by many an (prenominal) governments as among the strategies to raise national income and governments revenues. Governments intervention is of great magnificence as it helps in the computation and determination of tax margins to impose on the arriving firms. It is noteworthy that every country has certain unique economic policies enforced on the local business institutions and organizations. Businesses investing in other foreign countries are likely to carry with them operational laws used in the original country. Some