Sample Thesis Paper
Foreign direct investment (hereafter FDI) has been a growing economic phenomenon in the past couple of decades given the rapid increase in globalisation. FDI is defined as being an investment made by a foreign firm into another country (known as host country) through the transfer of tangible or intangible assets for the purpose of use in that country in order to generate wealth under the total or partial control of the owner of the assets.
1.9 Foreign Investment and Theories
Additionally, FDI can take form in mergers, acquisitions and joint ventures. Most common form of FDI is undertaken by Multinational Corporations (hereafter MNC) which are large companies that have operations and production facilities in various countries by opening a subsidiary in a foreign country. Firms undergo FDI in order to have the benefit of gaining lower cost advantages, which in turn can lead to achieving economies of scale. Also, to diversify their products into new markets where they can gain a higher market share, get access to more resources, and ultimately increase their profits and brand recognition.
According to UNCTAD developing countries are dominated by developed countries in attracting FDI. This seems as a reasonable statement, as enterprises look for certain and stable economic factors before investing in a foreign country, which are available in developed rather than developing countries, such as, political stability, modern infrastructural facilities, greater role of financial markets, large GDP and high GDP growth rates.
In an economic perspective, FDI is seen as an essential tool for economic growth and development through technology diffusion and spillover effects, employment and the regional multiplier, fairer balance of payments through exports, human capital becomes more specialised and trained which increases income, productivity and skills, etc… However, many authors are not unanimous on the positive effects of FDI on the economic growth, as certain conditions are required. This will be analysed thoroughly in the literature review in section II, then there will be an insight on Angola in section III, and finally my thesis in section IV from the information obtained and refined from sections II and III.