Topic > Essay on Foreign Direct Investment - 803

The reason is to take advantage of the traded goods and services produced in the field of specialization of a country which has the comparative advantage in each of the countries themselves. This specialization will improve the standard of living of a country. While foreign direct investment is considered the main element for the industrial development and economic growth of a host country. According to Rosa Portela Forte, "foreign direct investment (FDI) influences the economic growth of the host country through the transfer of new technologies, the training of human resources, integration into global markets, increased competition, development and reorganization of companies". In a previous study on economic activity between countries and international trade, there are two aspects of the possibility of a chain between FDI with trade. First FDI is a substitute or complement to trade. Second foreign direct investments become the cause of trade or vice versa. Mundell (1957) states that trade between countries and the movement factor of the nation, which includes foreign direct investment, act as substitutes. In the macroeconomic context, the aggregate level of FDI will in many cases influence the economy of the recipient country. and general