Conceptual approach of foreign investments, defining characteristics and determining factors #6

The conceptual approach of foreign investment, defining characteristics and determining factors

As a result, one operation is allocated, which consists of the first sale abroad (the investor is always a non-resident) and another operation, which leads to the expansion of an existing enterprise controlled by foreigners. Thus, we can talk about investments of the first order and investments of the second degree.

The first investment, in which a foreign company acts as an investor, can take the following forms:

Establishment of an enterprise (branch, branch, representative office, office ...);
Acquisition of an existing business;
Participation with a share in a new enterprise; and
Participation in an existing business.
Second-degree investments occur when four enterprises under foreign control, formed as a result of first-degree investments, in turn invest in one of the above forms. Thus, there are 18 opportunities, which, in turn, multiply if each company uses the investment again.

The concept of control or the nature of the control exercised is very important in determining FDI when participation in the capital of an enterprise as a necessary condition is not sufficient. Thus, the concept of control can be achieved through positive control and negative control. In case of positive control, the parent company integrates the company into its network and treats it the same as its subsidiaries, even if it has a minimum level of participation. In the case of passive control, a clear distinction is made between subsidiaries and companies that remain completely outside the network of activities.

Turning to the concepts raised in the literature, we would like to note that there is no uniform practice regarding the content of FDI and, therefore, there is no generally accepted concept. The differences in definition are due to the minimum indicators of participation in the company, the volume of investments, the control carried out, etc. Thus, the concept that excludes any criterion for identifying FDI is as follows: ISD is the placement of funds for an economic purpose or in a service sector that operates on the territory of another country. This concept defines only the criterion of implementation in another country, and, in our opinion, in accordance with this concept, it is almost impossible to separate FDI from portfolio. What is My Phone Number ? When you first get a new phone, you might not even be aware of its number. After all, who calls their own number, right? Luckily, there's a handy way to discover the number linked to your device with the help of the website or mobile apps.

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