Immense Benefits of Direct Investments
The concept of direct investments has been proposed in many countries due to the immense benefits which these countries receive. Direct investments; enable a business to easily jumpstart operations because, in most cases the business attains some measurable cost incentive. This motivates a business to launch its operat
Discussion
The inward direct investment is a new investments attraction technique that has been used by many countries to attract local and foreign investors. The inward direct investment enables boosts a business’s competitiveness in the sense that a business is assisted in the process of its operation. The inward foreign direct investment assists businesses to avoid the bureaucratic structures that most business entities go through. In this case, the business entity finds it easier to adapt to the new environment as compared to scenarios where the business start up mechanism is hampered by the existent bureaucratic structures (Cherry, 2007).
The inward foreign direct investment encourages business entities to launch their operations in new markets which traditionally have been ignored by most investors. These investments gives the business a go ahead in terms of handling the market challenges which in this case are presumed to hamper the profitability prospects of most businesses. The business is literally uplifted in terms of basic business operational mechanisms. This implies that the business essential components receive a major boost which enhances them to elevate the business to the next level (OECD, 2001).
Business entities require these investments in order to cushion them against unfavorable market conditions. Various reports indicate that most investors shy away from the unfavorable market conditions (Hackmann, 1997). These reports in particular point that unfavorable market conditions is the sole reason for most countries to embark on the inward foreign direct investment mechanism. These countries realize the need to formulate a comprehensive policy mechanism which is aimed at encouraging business investors to invest in the unpopular sectors. In addition, inward foreign direct investments give the business entity a new operational platform which enables the business to creatively redefine its operational strategy. Inward foreign investments give the business entity, ample space and time to review important strategies which the business shall use to enhance its competitiveness (IMF, 2003). This means that the business shall be in a position to review its operational strategy in order to boost its chances of achieving success in its respective market segment.
The author’s conclusions regarding the issue of inward direct foreign investment confirm the views concerning incentives used by various countries to attract foreign investors. The author’s views on the government’s mechanisms of encouraging investors coincide with mine. This is because the author concurs with the idea that the government has to use various strategies to boost business and trade in some sectors. In addition, I concur with the fact that the government has to formulate policy frameworks which shall be aimed at ensuring some form of trade balance in various sectors of the economy (Morsink, 1998). Further, the authors conclusions coincide with mine because, the author points at the expected investment attraction mechanisms that the government is expected to initiate in order, to attract investors. The other reason is that the author implies the government’s effort to continuously enact changes with regard to inward direct investments. The author explains that, this move will progressively improve the investment climate within the country, owing to the fact that, new policies in line with current trading policies will be formulated. This will consequently attract more investors to the country. To sum up the reasons, the author confirms my views on investment, when he categorically states that countries investment policies will determine the response of investors, in the sense that, good and articulate policies, will attract investors and vice versa.
Conclusion
The inward foreign direct investment concept should be encouraged by countries in order to take advantage of the incurring benefits. This form of investment should give the government and other regulators some green light regarding how to boost the culture of investments in their country. Thus, the inward foreign direct investment mechanism should be an objective of a government which aims to achieve meaningful benefits as regards the accumulation of investors. This is a step in the right direction.
References
Cherry, J. (2007). Foreign direct investment in post-crisis Korea: European investors and mismatched globalization. New Jersey: Routledge.
Hackmann, R. (1997). U.S. trade, foreign direct investments, and global competitiveness. New York: Routledge.
International Monetary Fund, Organization for Economic Co-operation and Development (2003). Foreign direct investment statistics: how countries measure FDI 2001. New York: International Monetary Fund.
Morsink, R.LA (1998).Foreign direct investment and corporate networking: a framework for spatial analysis of investment conditions. New York: Edward Elgar Publishing.
Organization for Economic Co-operation and Development OECD, (2001). Reviews of foreign direct investment: Lithuania. OECD Publishing.
No comments:
Post a Comment