PSYC 290 Lecture Notes - Lecture 7: Market Power, Foreign Direct Investment, Foreign Portfolio Investment

• School: Athabasca University
• Department: Psychology
• Course: PSYC 290
• Professor: Dr .pe

Document Summary

Canadian company invests in the united states, the investment is considered to be out-bound for canada, and in-bound for the united states. The relative permanency of fdi, in relation to fpi, affords a certain degree of economic stability to the fdi host country (i. e. , the country receiving the investment). In general, this stability can serve as an engine of growth for the fdi host country as well as better insulate it from the downside effects of macro-economic shocks. Fpi provides no such sta(cid:271)ility (cid:271)e(cid:272)ause a (cid:272)o(cid:373)pa(cid:374)y"s fi(cid:374)a(cid:374)(cid:272)ial investment in a given country can be redirected, usually quite easily and on very short notice, to another financially attractive country. Fpi does not generally provide the above-mentioned merits of fdi because most, if not all, portfolio investments seem to be motivated by short-term financial gains. Host country governments are rarely able to persuade profit-seeking firms to maintain their investments when financial gains seem more promising in other countries.