The advent of internet has changed everything. The world is literally a global village; thanks to the rapid communication becoming possible.<\/p>\r\n\r\n\r\n\r\n
The world economy also has changed; the slogans of openness have cracked open all the barriers of ideologies worldwide.<\/p>\r\n\r\n\r\n\r\n
As such the current of foreign direct investment that started in a big way from mid 1990s still continues to dominate the world economy in the threshold of the seventh year of the new millennium.<\/p>\r\n\r\n\r\n\r\n
In order to trace the latest trends in the circuit of foreign direct investment (FDI), we have to first learn the meaning of the concept.<\/p>\r\n\r\n\r\n\r\n
First of all, FDI is a long term economic commitment where an investor makes direct investment into an industry or business based in a different economy than his own base country. As for example when\u00a0 a businessman based in USA makes some investment in the enterprise based in Japan, a foreign direct investment takes place.<\/p>\r\n\r\n\r\n\r\n
Now the activity of FDI typically involves a bi-party relationship; it consists of the parent enterprise on the one end and the foreign affiliate on the other.<\/p>\r\n\r\n\r\n\r\n
These two parties together form a unique business entity which is then defined as transnational corporation (TNC).<\/strong><\/p>\r\n\r\n\r\n\r\n Just putting some money into a foreign business does not make you qualify as a foreign direct investor.<\/p>\r\n\r\n\r\n\r\n An enterprise will be marked as a FDI only when the parent company will yield control over its foreign affiliate.<\/p>\r\n\r\n\r\n\r\n The control means, the parent company will have the majority of the shares or have the voting power of the corporation.<\/p>\r\n\r\n\r\n\r\n Now, lets check the latest picture of the foreign direct investment in the world economy.<\/p>\r\n\r\n\r\n\r\n In the years immediately following the Second World War, the USA swept away the lions share of the global FDI.<\/p>\r\n\r\n\r\n\r\n The trend continued till 1960s when the rest of the world was recuperating from the holocaust of the World War II. But after that the picture started to change.<\/p>\r\n\r\n\r\n\r\n Starting from the mid 1990s<\/strong>, the activity of FDI is now a truly global phenomenon.<\/p>\r\n\r\n\r\n\r\n In fact, FDI has become more a weapon of economic prosperity in the hands of the developing nations rather than a few OECD countries.<\/p>\r\n\r\n\r\n\r\n According to the United Nations estimates, global foreign direct investment (FDI) inflows took a steep rise in 2005.<\/p>\r\n\r\n\r\n\r\n This was the direct consequence of cross-border mergers and acquisitions of companies. In today’s global economy, the FDI has an important role to play.<\/p>\r\n\r\n\r\n\r\n The importance is evident from this statistics; FDI stocks currently constitute over 20% of global GDP.<\/p>\r\n\r\n\r\n\r\n The other FDI trends can be summarized as follows:<\/strong><\/p>\r\n\r\n\r\n\r\n One interesting feature of FDI outflow relates to significant growth in FDI outflows from China and West Asia.<\/p>\r\n\r\n\r\n\r\n So far as china is concerned, it is the country’s growing demand for natural resources that account for this phenomenon.<\/p>\r\n","protected":false},"excerpt":{"rendered":" The advent of internet has changed everything. The world is literally a global village; thanks to the rapid communication becoming possible. The world economy also has changed; the slogans of openness have cracked open all the barriers of ideologies worldwide. As such the current of foreign direct investment that started in a big way from […]<\/p>\n","protected":false},"author":3,"featured_media":46360,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":""},"categories":[31,38],"tags":[497,496],"yoast_head":"\n\r\n
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