Olasunbo Sobogun
Given the hazardous nature of business, it is imperative that a businessman or an entrepreneur devise possible means to make a success of his/her enterprise through adequate knowledge and most importantly resources.
Foreign investment is an important factor that contributes to the success of any business and the economy at large. It involves capital flows from one country to another, granting extensive ownership stakes in domestic companies and assets (Dana Griffin in 2015).
Foreign investment denotes that foreigners have an active role in management as part of their investment, a modern trend leans towards globalization where multi national corporations have investments in a variety of countries. It can be made by individuals but are mostly made by companies and corporations with substantial assets looking to expend their reach . it can be direct or indirect.
Foreign direct investments (FDI) are physical investment and purchases made by a company in a foreign country while Foreign indirect investment involve corporations, financial institutions and private investors buying stakes or positions in foreign companies that trade on a foreign stock exchange. In general, this form of foreign investment is less favourable as the domestic company can easily sell off their investment quickly, sometimes within days of the purchase. This type of investment is also called foreign portfolio investment (FPI).
Commercial loans which are usually in form of bank loans that are issued by a domestic bank to businesses in foreign countries or the government of those countries and official flows which is a general term that refers to different forms of developmental assistance that developed or developing nations are given a domestic country are also types of foreign investment.
Summarising the influence of foreign investors on business, Hood &Young 2014 are of the opinion that foreign investment increase the flow of innovation, integrate foreign operations into local economies, produces better and cheaper products and services,creates employment opportunities, influence economic development amongst others.
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