Foreign Direct Investment: Potential Costs And Benefits For

Foreign direct investment (FDI) attracts mixed and often ill-considered emotions. Fear often underlies the negative perception of FDI in that offering overseas-owned enterprises a manufacturing base in the UK will further reduce the share of domestic markets held by UK enterprises. Analyzing the lik...

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Bibliographic Details
Published in:Financial management (London, England) England), 1990-02, Vol.68 (2), p.32
Main Authors: Neale, Bill, Pass, Chris
Format: Magazinearticle
Language:English
Subjects:
Advantages
Foreign investment
Multinational corporations
Technology transfer
Online Access:Get full text
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Summary:Foreign direct investment (FDI) attracts mixed and often ill-considered emotions. Fear often underlies the negative perception of FDI in that offering overseas-owned enterprises a manufacturing base in the UK will further reduce the share of domestic markets held by UK enterprises. Analyzing the likely costs and benefits of FDI is often complex for countries, such as the UK, that are simultaneously exporters of capital and hosts to the FDI of other countries. The effects of FDI are wide-ranging with specific economic impacts in important areas, such as balance of payments and trade, and resource transfers and employment effects. Foreign investment enlarges the stream of interest, profits, and dividend receipts available. Direct investment may involve import-substitution with inputs, or final products, now being sourced locally rather than abroad. Although foreign companies can benefit the local economy in various ways, inevitably there is some loss of economic independence when a large segment of local industry is effectively controlled by foreign firms.
ISSN:1471-9185