Research the worldwide FDI trend and detect the top 3 FDI destinations even though these countries...

Research the worldwide FDI trend and detect the top 3 FDI destinations even though these countries have various political/country risk associated with them. Justify such FDI inflow. Use data/graphs/charts where applicable.

Expert Solution

The top 3 FDI destinations in the world are USA, China (including Hong Kong) and Netherlands despite the fact that these three countries have varied level of both political risk as well as country risk associated with them.

The FDI inflow into each of these countries is fully justified. USA is the world’s biggest economy and even though its markets have saturated for most of the industries the country still is highly attractive when it comes to absolute consumption potential. This is because USA has the highest per capita income in the world and the U.S. economy is a consumption led economy. Even though growth of FDI inflow in USA is declining the country still attracts the highest amount of FDI in the world.

Next is China. It is the country that receives the highest FDI in the world after USA. What works in favor of China is that it has the largest population base in the globe and this proves to a be a highly lucrative proposition for most of the companies be it Lexus, GM, Apple or any other company that wants to benefit from the large base of consumers and potential consumers living in China. China’s rate of economic growth is also one of the highest in the world and this also helps it in attracting a high quantum of FDI.

Next in line is Netherlands. Netherlands provide attractive tax schemes to multinationals and this encourages the multinationals to invest in Netherlands. Secondly the quality of infrastructure in Netherlands is very high and this attracts many companies and investors. The workforce in Netherlands is highly educated and is also multilingual. All this helps different companies to operate efficiently from this region.

A graph is provided below:

jeff jeffy answered 1 year ago

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