Understand how political ideology shapes a government's attitudes toward FDI.
Political ideology is a crucial determinant of a government's stance on Foreign Direct Investment (FDI) (Alvin Hoi-Chun Hung, 2022). Different ideologies, such as liberalism, socialism, and nationalism, influence the policies and attitudes that a government adopts towards FDI. Liberal governments, for example, tend to embrace FDI as a means to enhance economic growth and prosperity (Keuschnigg, 2021) .They often view FDI as a source of capital, job creation, and technological advancement, and they promote open-market policies, reduced restrictions, and favorable investment climates to attract foreign investors. Liberal ideologies prioritize free-market principles and economic liberalization, making them more welcoming to FDI (Yasmeen et al, 2022) .
Describe the benefits and costs of FDI to home and host countries.
Foreign Direct Investment (FDI) brings about a range of benefits and drawbacks for both the countries of origin and the host nations. From the perspective of the home country, FDI has the potential to stimulate economic growth & job creation (Li et al, 2022) . When domestic businesses invest in foreign markets, it can result in increased production, higher sales, and opportunities for expansion (Hou et al, 2021). This growth in foreign markets often leads to greater demand for goods and services produced in the home country, ultimately boosting exports and economic prosperity (BurleaSchiopoiu et al, 2023). Furthermore, FDI can facilitate the transfer of technology and the exchange of knowledge, thereby improving the home country's competitive edge in the global market. Nevertheless, there is a potential downside, as it could lead to the displacement of domestic jobs if companies opt to offshore some of their operations to take advantage of lower production costs in other countries (Tag & Degirmen, 2022).
Explain the range of policy instruments that governments use to influence FDI.
Government policies aimed at shaping Foreign Direct Investment (FDI) involve a diverse set of policy tools crafted to either stimulate or control the influx of foreign direct investment into a nation (Song & Han, 2022). These instruments can include fiscal incentives, trade regulations, investment promotion, legal protection, and much more. Here's an explanation of the diverse policy, The impact and utilization of these policy instruments can vary depending on the country's goals and economic conditions (Song et al, 2021). Government FDI policies can be a broad field of study, and experts like those mentioned above provide valuable guidance and analysis of the influence and effectiveness of these instruments in their recent literature (Atitianti & Dai, 2022).Â
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Identify the implications for managers of the theory and government policies associated with Foreign Direct Investment (FDI).
Recognizing the theory and government policies linked to Foreign Direct Investment (FDI) is an essential aspect of effectively overseeing business operations that encompass foreign direct investment, and it holds significant significance for managers (Hobbs et al, 2021). These implications encompass understanding how FDI can affect business strategies, risks, opportunities, and the necessary actions to effectively manage foreign investments (Caetano et al, 2022). Managers need to understand how FDI theories, such as Dunning's eclectic paradigm, and government policies can affect business strategies, risk management, and company operations. Referring to recent expert sources helps them grasp the latest developments in these issues and apply the right strategies in a dynamic global context (Le et al, 2021).
CONCLUSION
Foreign Direct Investment (FDI) plays a pivotal role in the global economy, representing a fundamental aspect of international business and trade. FDI refers to the investment made by individuals, corporations, or governments in a foreign country's assets, such as companies, real estate, or infrastructure. These investments are aimed at establishing long-term business interests, control, or influence in the host country. FDI can significantly impact a nation's economic growth, job creation, and technological advancements, making it a critical subject of study and analysis in the field of economics and international relations.
