Foreign Direct Investment

Abstract

Asia is in a sweet spot, thanks to the massive investments that international investors are making in Asian countries. As the surge in investments other Asian countries like Malaysia, India, Thailand and Korea too have gained from the inflow of huge dollars into their economics. This has given a boost to these economies and their capital markets. Indian stock markets have been the recipients if massive foreign investment inflows, since the middle of last year, while FII’s have been steady investors in India. Amongst the developing and transition economics of both Europe and Asia, the fastest growing ones are the biggest recipients of Foreign Direct Investment (FDI). The latter is now accepted as panacea for all types of scarcities, financial capital, technological, know-how, efficient managerial techniques, organizational skill and access to market abroad. As against portfolio investment, FDI is a source of creation of tangible and intangible assets, employment and wealth in the host economy. It may provide rents, potential spillovers and externalities that are highly beneficial to the host country’s economic growth. The globalization of activities by Multinational Enterprises together with the effort made by all kids of governments has enhanced the important of FDI, not only as a development factors by itself, but also for its close linkage with trades technology and transfer and financial frows.