Advantages and Disadvantages of Foreign Direct Investment (FDI) for Essay

Advantages and Disadvantages of Foreign Direct Investment (FDI) for Germany 11101 - Essay Example For example the Organization for Economic Co-operation and Development OECD (2014) noted that global FDI flows increased by 4.5% in 2013. According to Radice (2012), even though the value does not represent a very highly anticipated growth, it still gives an indication that FDIs have been growing. IMF (2013) observed that even though FDIs are largely initiated by businesses and investors, the countries involved in these FDIs, whether they are home countries or host countries have ways in which the international investments through FDIs affect them. To get a better understanding of how FDI affects a country however, Frankel (2012) advised on the need to separate outward direct investment from inward investment. A preliminary search through literature has revealed that most researchers have focused their attention about FDI on how individual companies and investors benefit or loss out from FDI (Alguacil, 2002 and Imani, 2003). This leaves very little room for discussion about how countries as entities and stakeholders in international investments are impacted by FDIs. For the few available researches that put countries on the focus, they tend to concentrate on what the countries earn by way of acting as host countries to foreign companies that invest in those countries (Meier and Stiglitz, 2012). This makes knowledge very limited on how countries are impacted by FDI when these international investments take place with the countries acting as home countries. That is, when companies or investors from one country go to other countries to invest, there are both advantages and disadvantages to their countries of origin that needs to be researched into. As Germany is considered an important globa l player in the FDI engagements, it is important that research is performed on not just how Germany is benefits from the international