Foreign Direct Investment

What is it?  Business investment undertaken by a firm in another country, building a factory for example.

Foreign Direct Investment  This could also involve purchasing at least 10% of the shares in a foreign business.  This generally involves two multinationals going into business with each other in one of their host countries.

Governments and FDI  They will offer foreign companies tax breaks, subsidies, grants and low interest loans.  They may lift restrictions and relax regulations to make it easier for foreign firms to invest.

Governments and FDI  They may invest in their own infrastructure.  They may invest in education so people can get jobs with foreign companies.

Development Aid  Money and other forms of assistance that is given to less developed countries by governments in developed countries.  It`s purpose is to help the long term development of a nation.

 This is not to be confused with humanitarian aid.

Types of Development Aid  Bilateral aid.  This is one country giving to another.  Generally there are conditions attached.  Like What?

Types of Development Aid  Multilateral aid.  This is where governments give money to an international agency such as the world bank.

The World Bank  An international organisation that gives out interest free loans, grants and other fincancial tools in order for countries to improve themselves and eliminate poverty.

Types of Development Aid  Grants – A cash sum given to a less developed country for a specific purpose.  Loans – These have little or no interest.  Tied Aid – Assistance is given in return for something. We will give you money to purchase a specific thing.

What is this aid used for?  Education.  Infrastructure such as roads and bridges.  New Technology.  Health Care.

Why do countries do this  The faster foreign economies develop, the faster they can buy our stuff and build our stuff.