Importance Of Foreign Direct Investment Research Articles

Foreign investment in the transformation process of eastern europe

The unique importance of foreign direct investment (FDI) in Eastern Europe stems from the need to restructure economies dominated by heavy industries, lack of competition, and constrained lending capacities on international capital markets. Foreign participation in the privatization should actively be pursued by host country governments, especially because FDI would help to solve problems of corporate control in the privatization process. Although Eastern European countries provide large pools of cheap labor and potentially growing domestic markets, investors are still cautious with regard to large-scale capital commitments. Eastern European policymakers have begun to adopt foreign investment legislations that are liberal in some countries but still ambiguous in others. Therefore host countries should concentrate on establishing reliable and clear-cut investment rules. Special incentive measures should be applied only with appropriate caution. The support for investors given by Western governments and institutions should focus only on protecting them against imponderable risks rooted in the lack of political stability.

Foreign Direct Investment in the Tourism Sector of the Greek Economy

An attractive package of investment incentives is necessary to entice foreign investors into the Greek tourist sector, in order to reap potential economic and other benefits resulting from the orderly development of tourism in Greece. This article examines the extent, role and importance of foreign direct investment in the tourism sector of the Greek economy. In particular, the sectoral and regional breakdown of foreign investment are demonstrated. Finally, the governmental incentives and regulations which apply to the tourism sector are assessed and their implications highlighted with respect to the five-year tourism development plan 1983–87.

Sociopolitical Events and Foreign Direct In vestment: American In vestments in South and Central American Countries, 1950-1982

In any investment decision, risk is one of the most important consid-erations. A significant contributing factor to the risk offoreign invest-ment is sociopolitical instability of the host country. Despite otherfac-tors such as market size and competition, it is reasonable to assume a negative association between theflow offoreign direct investment and the emergence of sociopolitical instability symptoms. Surprisingly, however, a number of empirical cross-national studies have failed to show the expected association between the two. This study discusses possible reasonsfor thefailure of past research and attempts to ascertain the relationship between foreign direct in-vestment (FDI) and sociopolitical instability. Using multiple regres-sion analysis with lagged independent variables, this study analyzes such a relationship for South and Central American countries for the years 1950-1982. Taken together as a group, no relationship wasfound between sociopolitical instability and FDI in South and Central Amer-ican countries. However, separate analyses for individual countries produced the expected negative association for some of the countries. With the increasing volume and importance of FDI, there is a grow-ing interest among multinational corporations to incorporate foreign investment analysis into their strategic planning process. The results of this study indicate that because of the heterogeneity of sociopolitical structure of different host countries, a generalized set of criteria should not be used to measure the sociopolitical risk of investing in every country.

Foreign Direct Investment, Industrialization, and Social Change

Indicators of the changes in social structure which result from the industrialization of traditional societies are developed via factor analysis of data from 59 developing countries. Multiple regression is then used to investigate the relationship between industrialization, social change, and the relative economic importance of foreign direct investment. The relationship is found to be interactive; foreign direct investment intensifies the pressures for changes in social structure produced by industrialization. The paper concludes that this finding is inconsistent with a theory of underdevelopment in which integration into the world capitalist system inhibits, or even prevents, broadscale industrialization. Rather it requires a transformation of the concept of dependence which recognizes the possibility of capitalist industrialization through foreign investment.