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What Is FDI?
Foreign direct investment (FDI) occurs when a firm invests directly in new facilities to produce and/or market in a foreign country
the firm becomes a multinational enterprise
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What Is FDI?
The flow of FDI (OVERTIME) - the amount of FDI undertaken over a given time period
Outflows of FDI are the flows of FDI out of a country Inflows of FDI are the flows of FDI into a country
The stock of FDI (SNAPSHOT) - the total accumulated value of foreignowned assets at a given time
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So, FDI is an important source of capital investment and a determinant of the future growth rate of an economy
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Vernon - firms undertake FDI at particular stages in the life cycle of a product
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The free market view - international production should be distributed among countries according to the theory of comparative advantage
embraced by advanced and developing nations including the United States and Britain, but no country has adopted it in its purest form
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Recently, there has been a strong shift toward the free market stance creating
a surge in FDI worldwide an increase in the volume of FDI in countries with newly liberalized regimes
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