Question 6

Question 6

In foreign direct investments, a firm invests directly in the diplomatic facilities. Therefore, I think that FDI will likely lead to economic upheaval due to its inability to be flexible. The FDI implies a controlling stake in the business and often means to an ownership of physical assets such as buildings. Moreover, direct investors always commit themselves management of the international investment and hence a problem in pooling off at any sign of the trouble.

According to the argument on the issue of foreign investment becoming more nationalistic than another kind of investments, we can say that it can be compared to taking an entire nation. Moreover, this is evident in the control of the prominent sectors of the nation’s economy by the foreign investors. Therefore, measures should be enforced to control all the foreign investors in matters that can cause the threat to the national security of the host nation.

The FDI flow has moved from developed nations to developed nations just like the employment movement has moved more to the developed countries. Moreover, there has been an increase in FDI in developing countries with Africa still lagging behind which is similar to the case of employment with Africa suffering from unemployment. Over the past decades, the United States got worried about foreign investment into the United States with more jobs being on foreign investments. The local investors were moving out to seek for other markets while foreign investors such as Japanese were coming in. For example, local jobs like construction were being given to the foreigners, while jobs like magazines production were going from the U.S. The production jobs are leaving the states while consumption jobs like sales are more likely to come through.

Question 7

It is better for the economy to produce goods at home since this will result from other secondary benefits that come with production. These may include the creation of employment to the native people and also development like infrastructures and others which will boost the economy. Therefore, this is more preferred to having production taking place overseas since the country will miss the secondary benefits of having production at home. For example, the shift in production to oversee nation will continue to sabotage the economy of the developing nations. There is a greater benefit that is realized when the actual production takes place in the native country because national cohesion is promoted. Consequently, a shift in the production process will result in unemployment issues and lack of development being noticed in the developing nation.

Therefore, it is essential to create job opportunities in the areas of production since there are massive benefits that are associated with it. The production of goods and services brings double benefits to the host nations regarding infrastructural development and employment creation. Therefore, the creation of jobs in these lines results in a dual benefit to the country. The government should make sure that that the foreign investors comply with the environmental standards that are present in the terms and conditions. Moreover, the international investors should comply with all the labor laws of the host nation to ensure that the employees are protected.

Reference

“Comprehensive Study of the Interrelationship between Foreign Direct Investment (FDI) and Foreign Portfolio Investment (FPI),” Paper presented at the United Nations Conference on Trade and Development, June 23, 1999.

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