Foreign Direct Investment & Exchange Report Research Paper

Foreign Direct Investment & Exchange Report - Research Paper Example The paper tells that control in the host country is usually acquired through increasing active company operations. It can also be done by purchasing a company in the host country. In this case, foreign investors may want to extend business and offer Redbox to Brazil since Brazil does not invest in Redbox. Alternatively, Brazil can invest in manufacturing and marketing of Redbox. Considering various factors, FDI offers stable economic gain especially for countries that are focused on growth. The reason FDI for Redbox in Brazil is necessary is because FDI has been proved to be sustainable and stable even when other capital flows such as equity portfolio are faced with major hitches. This trend has evidently existed for many years and has contributed to the shift of capital inflow from portfolio investment and bank loans to FDI. On the contrary, Brazil can invest in Redbox if there is assurance that it will exceptionally contribute to growth and development. Brazil can also take advanta ge of its financial stability to invest since FDI takes advantage of the financial crisis. Brazil will also have the advantage of control over its resources. The flow of capital to other nations other than the investor’s country also has the advantage of giving high rates of return. This is because the flow of capital internationally reduces risks that are faced by capital owners hence enabling investors to diversify investment. Moreover, the integration of global capital markets helps in the spreading of best economic practices in areas such as governance among other areas.