Foreign Direct Investment (FDI) is a complex financial concept designed to measure cross-border financial investments and returns from the investments. Cross-border trade of physical goods is easier to understand as basically one nation imports goods to satisfy in-country demand at a reasonable price compared to trying to produce /mine etc. those goods domestically.
But FDI can be for a number of reasons ranging from tax policies of a country to M&A strategies for global business growth of a company to a desire for a country to fund infrastructure in an underdeveloped country in order to secure access to natural resources such as oil, rare earth minerals, lumber, rubber etc.
For this week’s discussion questions, please read the following two articles: https://blogs.imf.org/2021/12/16/the-worlds-top-recipients-of-foreign-direct-investment/ and https://unctad.org/news/global-foreign-direct-investment-rebounded-strongly-2021-recovery-highly-uneven and answer the questions below using a concise, clear writing style. Be sure to find, use and cite a minimum of two articles or other quality data sources to support your views.
(1) When you review the trend of the most recent ten years of by-country FDI activity, what is driving the US to the top position for FDI inflows and outflows?
(2) Why are Germany, Japan, and the Netherlands the top countries for FDI inflows into the US?
(3) Underdeveloped countries in Africa, Asia, and South America usually lack the capital to fund infrastructure, plants, and other facilities to mine/harvest/process natural resources. Why are FDI inflows so limited to many of these countries that are resource-rich / investment poor?
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