International Finance and Investments Essay Example | Topics and Well Written Essays - 2500 words

extraneous Finance and Investments - Essay ExampleAbundant in natural resources, it has ranked consistently high be in nearly all criteria of investment attractiveness.This empirical study will focus on Australias indwelling FDI profile and performance against the backdrop of global FDI flows. It will thus attempt to achieve some view essential to a better appreciation of Australias performance and potential in terms of investment festering and economic leadership in the Pacific rim.Foreign direct investment (FDI), according to Lamborn and Lepgold (2005), is a character of international capital flow that transfers a firms managerial skills and knowledge abroad it involves the creation of a foreign subsidiary, the assets of which are directly controlled by the parent company. It differs from foreign portfolio investment in that the latter involves the purchase of securities where the businesses are owned or operated by others, and which normally do not exceed 20 percent of issu ed capital. A distinguishing characteristic of FDIs is the fact that it does not only involve a transfer of resources nevertheless also the science of control (Krugman & Obstfeld 1994). It follows that the subsidiary does not only have a financial obligation to the company but also is part of the same organisational structure. The Organisation for Economic Co-operation and Development (OECD) states that FDI reflects the objective of obtaining a lasting touch on by a resident entity in one economy (direct investor) in an entity resident in an economy other than that of the investor (direct investment enterprise. (OECD Benchmark Definition). It adds that the lasting interest implies the existence of a long-term relationship between the direct investor and the enterprise and a significant degree of influence on the counselling of the enterprise.For both developed and developing countries alike, the attraction of FDIs lies in the assumption that greater inflows of foreign investmen ts will