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Finally, countries sometimes prohibit national firms from investing in certain countries for political reasons. Such restrictions can be formal or informal. For instance, formal rules have prohibited US firms from investing in countries such as Cuba, Libya and Iran, whose political ideology and actions are judged to be contrary to US interests.

Host Country Policies to Encourage Inward FDI

it is increasingly common for governments to offer incentives to foreign firms to invest in their countries. Such incentives take many forms, but the most common are tax concessions, low interest loans, grants or subsidies. Incentives are motivated by a desire to gain from the resource-transfer and employment effects of FDI. They are also motivated by desire to capture FDI away from other potential host countries. Not only do countries compete with each other to attract FDI, but so do regions of countries.

Host Country Policies to Restrict Inward FDI

Host governments use a range of controls to restrict FDI. The two most common are ownership limitations and performance requirements. Ownership restraints can take several forms. In some countries foreign companies are excluded from certain businesses. For example, they are excluded from tobacco and mining in Sweden and from the development of certain natural resources in Brazil, Finland and Morocco. In other countries, foreign firms may only own up to a certain percentage of the shares in the local company.

RISK

For most decisions, risk is a function of random events that are inherently unpredictable. In the context of investment decisions (specifically capital budgeting decisions and other investment isues) risk relates to the variability of net cash flows associated with a given asset or project. The higher the variability of net present value, the riskier the project.

Risk/return concepts are fundamental to the subject of finance. Investors are unwilling to undertake risky decisions especially in international business unless they are compensated accordingly.

DIVERSIFICATION

The critical concept of risk in underlying investments is diversification. The theory is that, since the risk of a portfolio can be averaged across a large number of individual assets, a decrease in the value of some should be compensated by a gain in the value of others. This theory is particularly relevant in international business since all the location本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。