Foreign direct investment.doc

Foreign direct investment
Table of Content
Introduction
The definition of FDI…………………………………………1>..
3. The Advantages and disadvantages of FDI
4. Conclusion
Reference

Introduction
The paper will define the effects of foreign direct investment (FDI). These effects can have on host country economics. FDI is one of the most important investments for most developing countries. It can bring host countries a number of benefits. FDI is the direct ownership of facilities in the host countries. It involves the transfer of resources including capital, technology, and personnel. Since the industrial revolution, the bottlenecks which restricted economic growth had appeared in most developing countries. They contained capital, technology and labor force. Economic development was constrained by lack of capital. FDI is vital to promote the development of economic in host countries. Meanwhile, it can also increase employment and foreign exchange reserves. However, it may cause many problems to the host countries such as high pollution. China is an emerging economic giant in the developing world. It has about 23% of world population but its economic grows at the rate of 8 %.( World Development Report 2006). Its economic has some special features such as huge natural resources, cheap labor force and huge domestic market. For these reasons it attracts FDI from some developed countries to serve the local market and to e an important part of the global integration. In this paper I will use some data from China to define different effects of FDI.
2. The definition of FDI
FDI refers to foreign direct investment, a part of a country’s national financial accounts. FDI is a kind of investment of foreign assets into the host countries’ structures, equipment anizations. It does not contain the capital which invests in the stock markets. FDI is thought to be more important to a country’s economic growth. FDI is the result of economic development and the inevitable e of the devel