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What are the major factors that influence a foreign firm in selecting investment location?
? Size and expected growth of the market to be served
? Long term macroeconomic and political stability
? Skilled or trained workers
? Transportation and communications infrastructure
? Tax breaks and subsidies generally influence investments location decisions only at the margin
4. What are some of the policies that do not serve the interest of the host country on the long term?
? Policies ostensibly designed to maximize net benefits of FDI for recipient economies ignore their effects on incentives for investors and result in subscale manufacturing plants, frequently through mandated joint ventures, which are not allowed to source inputs freely and contribute little to the country’s development
? Arrangements between foreign investors and host economy authorities blocking other new entrants to the industry or inhibiting alternative sources of supply are also common but generally not in the best interests of the host economy on the long term
5...
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