ADM 3318 Lecture Notes - Lecture 12: Foreign Direct Investment, Externality
4 Apr 2016
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Document Summary
Merger and acquisiions (together more valuable than apart) Greenield investment establishing a new operaion in a foreign country (staring from scratch) Fdi the acquisiion or construcion of physical capital by a irm from a source country in another host country. Direct advantage to host naion each dollar of fdi makes available a dollar of domesically earned currency for subsequent endeavors. Posiive externaliies for host naion technology, hr and knowledge transfers. Poliical ideology: radical view: argue that fdi is never posiive for the host naion. Fdi should only be allowed if the beneits outweigh the cost. Internaionalizaion theory favor fdi due to major drawbacks of licensing: firm loses gives away valuable technological informaion and capabiliies b. Loss of control over markeing, manufacturing and strategy: firms will undertake fdi. In the atempt to ensure they have signiicant presence in strategic regions.
