Foreign Direct Investment and Foreign Portfolio Investments

What are some common FDI regulations in different countries?

• Unrestricted access to all industries

• No government oversight on foreign investments

• Common FDI regulations in different countries include restrictions on specific industries, limits on ownership percentages, approval processes by government agencies, and reporting requirements to monitor foreign investments.

• No reporting requirements for FDI

Discuss the advantages of FDI over FPI.

• FDI involves long-term relationship, control, capital, technology, management expertise, economic growth, job creation, stability, and benefits for the host country.

• FDI involves short-term relationship

• FDI does not contribute to economic growth

• FDI does not create job opportunities

Explain the role of FIIs in stock markets.

• FIIs are responsible for market volatility

• FIIs have no impact on stock market performance

• FIIs always act in the best interest of retail investors

• FIIs contribute to market liquidity, capital inflow, price discovery, and overall market efficiency.

How does FDI impact the host country's economy?

• FDI impacts the host country's economy by bringing in capital, technology, expertise, stimulating economic growth, creating jobs, improving infrastructure, and increasing exports.

• FDI only benefits the foreign investors, not the host country

• FDI has no impact on the host country's economy

• FDI leads to increased unemployment and poverty in the host country

What are the different types of FDI entry modes?

• Licensing Agreement

• Greenfield investment, Merger and Acquisition, Joint Venture, Strategic Alliance, Franchising

• Subsidiary

• Exporting

Why do countries impose regulations on FDI?

• To control the flow of foreign investment, protect national interests, ensure economic stability, promote domestic industries, and safeguard national security.

• To promote international cooperation

• To discourage foreign investment

• To increase unemployment rates

Compare and contrast FDI and FPI in terms of long-term investment.

• FDI involves establishing a physical presence in another country, while FPI involves buying financial assets without a physical presence.

• FDI and FPI are interchangeable terms

• FDI and FPI have the same investment horizon

• FDI and FPI both involve physical presence in another country

How do FIIs influence the stock market volatility?

• FIIs only influence stock market volatility through government policies

• FIIs influence stock market volatility by injecting large amounts of capital and creating buying or selling pressure on stocks.

• FIIs have no impact on stock market volatility

• FIIs stabilize the stock market by reducing volatility

What are some potential risks associated with FDI for the host country?

• Loss of sovereignty, exploitation of labor and resources, profit repatriation, competition with local businesses, environmental degradation

• Increase in employment opportunities, technology transfer, economic growth

Discuss the importance of FDI for economic growth and development.

• FDI is important for economic growth and development because it brings in capital, technology, expertise, boosts productivity, creates jobs, stimulates innovation, and improves infrastructure.

• FDI leads to increased unemployment rates

• FDI has no impact on economic growth and development

• FDI only benefits foreign investors and not the host country