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The Importance Of Foreign Direct Investment

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Foreign direct investment (FDI) is when a corporation in a country establishes a business operation in another country, through setting up a new wholly owned company , or acquiring local company, or making a joint venture in the host country .an important element of globalization and the whole world economy, is a driver of employment, technological progress, productivity improvements, and economic growth. It plays the critical roles of filling the development, foreign exchange, investment, and tax revenue gaps in developing countries (Smith, 1997; Quail, 2007). In particular, it can play an key role in any country development efforts, including: supplementing domestic savings. employment generation and growth. integration into …show more content…

positively and negatively. These channels include:
(a) A positive "vanguard effect" which foreign aid from a particular donor country promotes FDI from the same donor country (Kimura and Todo, …show more content…

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The impact of international agreements on FDI :

European Union agreement :

The EU represents the oldest , largest , and most successful regional integration organization in the world its include 28 country from all the world. Its functioning, establishment , deepening the relationship between the countries that make a huge impact on FDI over the years. Since its establishment in 1958, the EU has gone through six rounds of enlargements:
- 1973 (Denmark, Ireland and the United Kingdom)
- 1981 (Greece)
- 1986(Portugal and Spain)
- 1995 (Austria, Finland and Sweden)
- 2004 (Cyprus, Czech Republic, Estonia, Hungary, Malta, Latvia, Lithuania, Poland, Slovakia and Slovenia)
- 2007(Bulgaria and Romania).

Expected EU membership of CEE countries had an impact on their FDI inflows in the years prior to join, although it is hard to estimate how is the good impact ' it gave them gradually free access to the EU market for manufactured goods – the greatest benefit attracting export-oriented

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