Model and Practices of Foreign Direct Investment in Asia

Abstract

          Foreign direct investment (FDI) is when a company or entity based in one country makes an investment in another company or entity based in a different country, and by which the foreign investor will have control over the company purchased. Companies, rather than governments normally carry out the process.          This study focuses on the Model and Practices of Foreign Direct Investment in Asian countries, and specifically Laos and Myanmar. The data provided analyses the effects of all Asian countries and pays particular attention to Laos and Myanmar. The paper provides a balanced view highlighting the positive effect such as the development of economies and societies and also the negative effect such as the imbalance of the distribution of investment.          One of the major drivers behind investment in Asian countries is multinational companies (MNE’s), they are looking to take advantage of the many benefits such as the low cost of labor and a wide array of natural resources. Seeking investment from Multinational companies by host countries is deemed a top priority, as many believe this will increase their economic stability and help to reduce the development gap between nations.          The results indicate that foreign direct investment (FDI) plays a large part in the development of emerging economies, such as many southeast Asian countries, but is not the a sole factor. A major emphasis is placed on building a stronger relationship with the rest of Asia as a whole in a hope of developing economic, social and trade partnerships. The unreliable social, governmental and economic situation in many Asian countries was found to be a limitation to FDI. Having an appropriate strategy to implement FDI in Asian countries wouldallow foreign investors to offset for the revealed barriers of FDI.