FDI: The current trend of investments

When we discuss on FDI, it is very essential that one is able to make a clear demarcation between the FDI flow as well as the FDI stock. The former refers to the amount of the foreign direct investment which has been undertaken across the period (which normally is taken as one year) whereas the stock of FDI implies the total built up value of the foreign assets which are owned for a given period of time.

It has been seen that there has been a significant increase in the investment opportunities in the FDI domain during the years 1990 to 2000s. This increased growth rate is due to the political stability as well as the other economic factors present within the developing countries. Further it has also been seen that with the advent of globalization, the economy of the world has made organizations invest across the globe to have the presence felt in almost all the regions of the world. The increase in the inflows which the county of US has been seeing is another shocking but a significant trend where the inflows have increased but on the other hand its counterpart, the US –FDI –abroad has not gone that high. Once can conclude the growth if the US inflows to be high due to the lucrative US markets and also due to the falling dollar value which has been seen in the recent past.

FDI also have several benefits like rapid approvals for the investments, concessions in taxes, better liberalized environment for operating, subsidies on loans, grants, etc are few of them. The country (i.e. the host) also gains benefits due to the FDI's in the increased job opportunities, better living standards, enhanced economic growth, etc. Hence FDI's are always beneficial for both the host country as well as for the foreign investor.

Governments have also devised many policies for attracting the FDI's as these funds can be used for national development projects and strategies. Governments also provide various types of tax benefits to the investors so that higher amounts of investments are made by the foreigners. The basic strategy of the government is to make the FDI investment all the more lucrative for the investors to increase investment opportunities. The common ones which are implemented by the government is to provide tax benefits as well as reduced interest rates on loans which have till date run successfully.

The developing countries have now become hot attractive spots for the FDI's due to the better political stability and economic factors. Countries like India have accumulated a lot in the form of FDI from the other foreign countries as the economic and political stability of the country of India gives an ease to the investor to invest without much contemplation. We have seen how the FDI amount varies and increases in the Indian market when the stock market face jolts and jerks.