International investment essay

Control shows the need for a firm to manage and influence foreign firms’ daily operations. FDI can be in the form of establishment of new firms or acquisition of existing firms in the host country. This review discusses the motives of the firms that choose to invest in, in foreign countries and the types of foreign direct investment in Saudi Arabia. Also, it describes the roles of FDI in the growth of GDP and non-oil GDP in Saudi Arabia. The last part entails the moves that the Saudi Arabian Government should take to attract more FDI. Some organizations want to maintain their international brand name to make sure that they are always ahead of their competitors (Newell et al, 2016). There are two major types of FDI.

These include vertical and horizontal FDI. In horizontal, a business decides to expand its operation to other countries. In this case, it offers the same services in all the countries it operates. Platform FDI mainly occurs in free trade areas. For instance, a business in Saudi Arabia may expand and start exporting their products to the neighboring countries. Foreign Direct Investment (FDI) has lately been declining (Örnek & Ayas, 2015). The situation has been led by some factors, both internal and external to the government. Strategies have to be made to ensure that the foreign direct investment rises again to put Saudi Arabia in its top position. The political status and stand of the Saudi Arabian government have to be stable. The ministry of foreign affairs has to work hard and build long term partnership with investors from other nations.

That is possible when they implement things like removing trading sanctions and barriers that hinder active trading between countries (Mgeni & Nayak, 2016). Lately, many companies have reduced access to credit. The government has to put measures that will open up straightforward funding to registered companies to ensure that everything runs smoothly. Foreigners need to be given the 100% ownership in the retail and wholesale sectors. The investments that they make are directly going to benefit the locals. The government has to regulate the privatization to prevent foreigners from dominating the locals in the same field. Trading restrictions must be reduced and limited at all cost to ensure that more investors come to boost the FDI. The concept is very straightforward to implement. The Qualified Foreign Investors (QFIs) are supposed to be given the freedom to make investments in the Saudi Arabian Stock Exchange Program.

A proposal made by the CMA to make amendments for QFIs qualifications must be implemented so that it becomes easy for foreign investors to make applications and get registered to invest in the country. The new Insolvency Law must be implemented (Mian & Smith, 2016). It is aimed at preserving the value in any opportunity open for the local as well as the foreign investor. The law is designed to attract foreign investments. A precise definition of FDI can be stated to be a collection of technological, capital and project management (SBA, 2018). Saudi Arabia carried out proper prospects, and they are now able to benefit from proper growth in the manufacturing sector. That is because foreign investors have helped them optimize the utilization of their raw materials leading to some increasing factor productivities.

The use of new skills in management, manufacturing, and marketing has brought diversification of skills and expertise in every field of investment (Almfrajia & Almsafir, 2014). FDI has led to some improvement in government systems. Most investments focus on exploiting other resources other than oil. Others are more focused on getting a market for their goods and services. That means that FDI is diverse and so it opens doors for vertical and horizontal trading opportunities. The horizontal FDI is usually attracted by factors like a growing market size courtesy of the government of Saudi Arabia (Santikian, 2014). That is going to serve as an import substitution alternative. The policies structured by the government to favor FDI will make the non-oil industry to grow and reduce the overdependence of Saudis economy on oil.

The FDI increases the economic growth rate considerably and also it gives a chance for the local institutions to become more productive. Saudi Arabia can also be a beneficiary of technology dissemination but if proper measures are not put in place, hardly any progress is going to be recorded in Saudi Arabia’s economic growth. References Alfaro, L. FDI and growth: Does the sector matter?Harvard University, Harvard Business School, Working Paper, pp. ac. uk/download/pdf/82533638. pdf Hansen, H. and Rand, J. On casual links between FDI and growth in developing countries. South Eastern Europe Journal of Economics, 2(1), pp. Retrieved: www. asecu. gr/Seeje/issue02/lyroudi. pdf Mgeni, T. W. Accounts receivable management policy: theory and evidence. The Journal Of Finance, 47(1), 169-200.