Chapter 6. Foreign investments

• International resource movements
• Foreign direct investments
• Foreign portfolio investments
• Pros and cons for investing abroad
• Incoming investments
• Management and design of foreign investments
• Attraction of investments and free economic zones
• Mergers and acquisitions
• Questions for chapter review
• Chapter bibliography

This chapter is intended to examine cases where an organization in another country seeks to own the shares of another company. So-called portfolio or speculative foreign investments and strategic or so-called direct foreign investments are described separately. The theoretical basis of investment in another country is associated with the concept of transferring resources to another country. There are several different reasons for shifting resources to another country, which are described and explained.
The previous chapter described one type of alliance – equity alliances are usually considered as foreign investments, but this chapter looks at investments much more deeply. Benefits and challenges for an investor in another country are examined separately, as well as benefits for the host country, as well as threats from foreign investors to local companies.
The chapter examines methods of investment attraction and provides specific tax discounts for foreign investors. Separate attention is paid to the so-called greenfield and brownfield investments. The criteria that are important when choosing an investment method in another country are described, starting from the establishment of a completely new organization and ending with the purchase of shares of an existing company. Mergers and acquisitions have been booming since the beginning of the 21st century, so the chapter describes the growth of global companies by acquiring companies in other countries.

Harvard about FDI

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