In contrast, if interest rates were the main motive for international investment, FDI would include many industries within fewer countries.
The origin of the investment does not impact the definition, as an FDI: the investment may be made either “inorganically” by buying a company in the target country or “organically”
by expanding the operations of an existing business in that country.
Methods 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 Forms of FDI incentives
Foreign direct investment incentives may take the following forms: • low corporate tax and individual income tax rates • tax holidays • other types of tax concessions • preferential tariffs • special economic zones • EPZ – export processing
zones • bonded warehouses • maquiladoras • investment financial subsidies • free land or land subsidies • relocation & expatriation • infrastructure subsidies • R&D support • energy • derogation from regulations (usually for very large
projects) FDI FDI flows are more likely to go countries with democratic institutions.
A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
 A 2008 study by the Federal Reserve Bank of San Francisco indicated that foreigners hold greater shares of their investment portfolios in the United States
if their own countries have less developed financial markets, an effect whose magnitude decreases with income per capita.
In a narrow sense, foreign direct investment refers just to building new facility, and a lasting management interest (10 percent or more of voting stock) in an enterprise
operating in an economy other than that of the investor.
The difference between the two, which will become the cornerstone of his whole theoretical framework, is the issue of control, meaning that with direct investment firms are
able to obtain a greater level of control than with portfolio investment.
“ China FDI in China, also known as RFDI (renminbi foreign direct investment), has increased considerably in the last decade, reaching $19.1 billion in the first
six months of 2012, making China the largest recipient of foreign direct investment at that point of time and topping the United States which had $17.4 billion of FDI.
 A major source of investment is real estate; the foreign investment in this area totaled $92.2 billion in 2013, under various forms of purchase structures
(considering the U.S. taxation and residency laws).
Another observation made by Hymer went against what was maintained by the neoclassical theories: foreign direct investment is not limited to investment of excess profits abroad.
 A 2010 meta-analysis of the effects of foreign direct investment (FDI) on local firms in developing and transition countries suggests that foreign investment robustly
increases local productivity growth.
Hymer’s importance in the field of international business and foreign direct investment stems from him being the first to theorize about the existence of multinational enterprises
(MNE) and the reasons behind FDI beyond macroeconomic principles, his influence on later scholars and theories in international business, such as the OLI (ownership, location and internationalization) theory by John Dunning and Christos Pitelis
which focuses more on transaction costs.
These theories were based on the classical theory of trade in which the motive behind trade was a result of the difference in the costs of production of goods between two
countries, focusing on the low cost of production as a motive for a firm’s foreign activity.
Countries with fewer capital controls and greater trade with the United States also invest more in U.S. equity and bond markets.
As opposed to traditional macroeconomics-based theories of investment, Hymer states that there is a difference between mere capital investment, otherwise known as portfolio
investment, and direct investment.
Horizontal FDI arises when a firm duplicates its home country-based activities at the same value chain stage in a host country through FDI.
Moreover, he clarifies that FDI is not necessarily a movement of funds from a home country to a host country, and that it is concentrated on particular industries within many
Removal of conflicts: conflict arises if a firm is already operating in foreign market or looking to expand its operations within the same market.
 FDI, a subset of international factor movements, is characterized by controlling ownership of a business enterprise in one country by an entity based in another country.
Foreign direct investment is distinguished from foreign portfolio investment, a passive investment in the securities of another country such as public stocks and bonds, by
the element of “control”.
Moreover, “the efficiency-value creation component of FDI and MNE activity was further strengthened by two other major scholarly developments in the 1990s: the resource-based
(RBV) and evolutionary theories” In addition, some of his predictions later materialized, for example the power of supranational bodies such as IMF or the World Bank that increases inequalities (Dunning & Piletis, 2008).
However, it must be taken into account that a reduction in conflict through acquisition of control of operations will increase the market imperfections.
Intrigued by the motivations behind large foreign investments made by corporations from the United States of America, Hymer developed a framework that went beyond the existing
theories, explaining why this phenomenon occurred, since he considered that the previously mentioned theories could not explain foreign investment and its motivations.
In fact, foreign direct investment can be financed through loans obtained in the host country, payments in exchange for equity (patents, technology, machinery etc.
2052; 113th Congress), a bill which would direct the United States Department of Commerce to “conduct a review of the global competitiveness of the United States in attracting
foreign direct investment”.
Platform FDI Foreign direct investment from a source country into a destination country for the purpose of exporting to a third country.
 Supporters of the bill argued that increased foreign direct investment would help job creation in the United States.
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Photo credit: https://www.flickr.com/photos/marfis75/2521827947/’]