ECO 2121 Lecture Notes - Lecture 4: Offshoring, Absorptive Capacity, National Treatment
19 Oct 2016
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Document Summary
There are basically 3 factors of production: land, labour, capital. Production is carried out by combining labor and investment, which over time is accumulated in the form of capital. Besides domestic investment, a country can increase investment by welcoming foreign capital [investment] Includes equity securities: shares, stocks, mutual fund: long term and short-term bond and other debt securities, money market instruments. Direct investment: direct investor is an entity resident in one country that has acquired, at least. 10% of the voting power in the non-resident entity with the objective of establishing a lasting interest. It could include an individual, group of individuals, incorporate or unincorporated business unit, government body etc: direct investment does not mean complete control, which generally requires more than 50% asset ownership. It covers short and long-term trade credits, loans. We give emphasis to the study of fdi because it has long term impact, related to ownership issue and related to trade as well.
