Faculty of management inb 001

Host Country Policies to Restrict Inward FDI
Host governments use a range of controls to restrict FDI. The two most common are ownership limitations and performance requirements. Ownership restraints can take several forms. In some countries foreign companies are excluded from certain businesses. For example, they are excluded from tobacco and mining in Sweden and from the development of certain natural resources in Brazil, Finland and Morocco. In other countries, foreign firms may only own up to a certain percentage of the shares in the local company.
5. Control: the host countries are threatened by the investment of large multinationals. In fact, big companies impose their rules due to the size of their business activities. Actually, big multinational controls the price and quality of production abroad. As a matter of fact, the issues have a negative impact on the local market and workers. Some governments implement special policies to limit the ownership of foreign investors in their markets.
Purchase or build: foreign investors face the challenge of weather develops an existing business or start a new one abroad. From one point of…
Also, the foreign investors tend to rely on different locations and regions in the world to acquire the lowest production cost. For example, the production process of on single car is based on collecting the different parts of one single care from different regions of the world; the motor from Germany, design from Italy, and assembly in China. As a result, any issue encountered during the production process in one country could delay the whole production process.
Customer knowledge: some countries are reputed of making high quality of specific products such as the French perfume, Swiss Chocolate, and German cars. Indeed, customers have product’s perceptions depends on the country where it is made. For example, French perfume has a larger acceptance from customers than other perfume producers, and Italian clothes designs are more likely perceived as better than other European’s designers.
Following clients: usually companies make the decision to engage in foreign investment when the firms they supply have already engaged abroad. In other words, the foreign investors follow their suppliers and make sure to engage with the suppliers that they have already close relationship…
In some ways, the creation of the regional trading blocs is interpreted as obstacles to global trade and exchange of the international advantages. For example, the North American Free Trade Agreement (NAFTA) that includes the U.S., Canada, and Mexico is a regional trade agreement between these countries, which implies lower barrier and trade restrictions. The U.S. imports textiles and other goods from Mexico at a lower price than the local market, which is due to cheap labor and reduced tariffs. However, other Asian countries have a reputation of being the haven of cheap production such as China, which is even cheaper than Mexico. In this scenario, we notice that regional blocs could limit the opportunities that international trade could offer. Equally, the European Union is another example of regional blocs that gathers most of the European countries, such as, France, Germany, Italy and others. The European countries have special agreements in which each country could trade with one another at a lower tariffs and reduced restrictions. As a result, this could causes isolation from using the opportunities offered from the other regions of the world such as production cost, cheap labor, technology transfer, and production quality.
6. Home countries may promote outward FDI because: