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FDI Strategy II by Joshua Smitth
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FDI Strategy II |
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Business,Travel & Tourism
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Foreign Direct Investment (FDI) Strategy can be defined as a category of international investment where a resident in one economy (the direct investor) obtains a lasting interest in an enterprise resident in another economy (the direct investment enterprise) (International Monetary Fund, 1993). When a country decides to target higher levels of foreign direct investment (FDI), it needs to have a clear and prioritized FDI Strategy in place. The strategy should set out ambitious but achievable goals and targets and a coherent and logical set of actions to meet these goals and targets. An effective FDI Strategy seeks to establish the location's strengths and weaknesses and the specific industry sectors that are compatible with these attributes. It also sets out the conditions and resources required to make the location fully competitive to attract new investment from these sectors, such as: • whether legal, policy, or regulatory barriers exist and the necessary steps to remove or alleviate them • what infrastructure, skills, and other conditions need to be stimulated, and • how the location will proactively promote for new investment. Choosing the most suitable FDI Strategy, the foreign direct investor may acquire voting power of an enterprise in an economy through any of the following methods: • by incorporating a wholly owned subsidiary or company anywhere • by acquiring shares in an associated enterprise • through a merger or an acquisition of an unrelated enterprise • participating in an equity joint venture with another investor or enterprise Last but not least, an important dimension of an FDI Strategy entails ensuring adequate and competent institutional arrangements to deliver the desired strategic goals. This has to do not only with the competence of individual institutions, but also with the overall institutional conditions and arrangements that need to be in place to achieve an effective framework. An effective institutional framework ensures that key functions are covered and not missing, overlapping, or duplicating and, also, that efficient communications are performed between relevant public sector bodies and private sector counterparts. References: 1. http://en.wikipedia.org/wiki/Foreign_direct_investment http://www.grips.ac.jp/teacher/oono/hp/lecture_F/lec06.htm
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FDI Strategy, Foreign Direct Investment Strategy, Nation Brand, Impact of Foreign Direct Investment, City Branding,
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