FDI in Sudan agriculture Research Paper Example | Topics and Well Written Essays - 2500 words

FDI in Sudan agriculture - Research Paper Example However, in subsidiaries, more than 50% of the voting rights must be controlled by the parent company. Foreign direct investment in which the parent enterprise cannot exercise control over the affiliate enterprise is basically termed as a portfolio investment (Organization for Economic Co-operation and Development, 2009, pg 17). Moreover, FSI stimulates economic growth in host countries of the affiliate companies. Host countries therefore undertake to attract foreign investors by introducing tax breaks, specific grants and incentives, investment regulation relaxation and enforcing low interest rates on loans to foreign investors. Foreign Direct Investment in Developing countries, Africa and Sudan Foreign direct investment has in the past few years grown considerably, particularly in developing countries’ agricultural sector. Foreign investors view developing countries to have exceptional potential of economic growth. Primarily, multinational companies have significantly increa sed foreign investments in developing countries because of the competitive advantage in their investments. Currently, foreign direct investment in developing countries constitutes sixty one percent of total foreign investments. ... In a move to promote foreign investment in agricultural sector, African governments have undertaken structural adjustment and liberalization of policies to sourcing and marketing inputs and outputs of agriculture both locally and internationally. The governments have also introduced export-processing zones in targeting foreign investors in the agricultural sector (Basu, et al, 2002, pg 12). FDI and Development: Review of the literature Forms of International Investment in Developing Countries International investors may enter foreign markets through trade, foreign direct investment, or international licensing of technology and intellectual property such as copyrights and patents. Each of the above forms is characterized by different levels of involvement, managerial requirements, and commitment in a foreign market (Schaffer, Agusti, and Earle, 2008, pg 6). Trade in foreign markets usually has the least political and legal risks due to its limited involvement in the foreign economy es pecially in the case where a transnational corporation is maintaining sales agents over seas. Trade is used by investors to import items not readily available in the country and export items that are in plenty or not needed. In addition, foreign governments may regulate trade by enacting laws, policies, and import duties. Licensing of technology and intellectual property are substantial assets with legal rights to artistic or written works, name and government grants owned by domestic and international firms. Lastly, foreign direct investment refers to ownership and active control of productive assets by an investor in a foreign country with the expectation of making profits both in the short run and in the long run. Land and environmental