ARBUS301 Chapter Notes - Chapter 1: Foreign Direct Investment, Country Risk, Foreign Exchange Risk
26 Jan 2019
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International investment: transfer of assets to another or the acquisition of asset in that country. Such assets are referred to as factors of production that include technology, capital, managerial talent, and manufacturing infrastructure. The two essential types of cross-border investment are: International portfolio investment: passive ownership of foreign securities such as stocks and bonds to gain financial returns. (short-term) Foreign direct investment (fdi): the firm establishes a physical presence abroad through acquisition of productive assets such as capital, technology, labour, land, plant, and equipment. (long-term because investors retain partial or complete ownership of the assets they acquire) 3 factors why trade growth has outpaced gdp growth: Rise of emerging markets during the past three decades. Advanced economies (such as the us and the eu) are sourcing many of the products they consume from low-cost manufacturing locations (as. Advances in information and transportation technologies, decline of trade barriers, and liberalization of markets all contribute to rapid growth of trade among nations.
