WHAT IS THE CONNECTION BETWEEN FOREIGN DIRECT INVESTMENT AND MULTINATIONAL companies?
Multinational companies are companies that operate internationally; Like Coca Cola or IBM. Foreign direct investment is investment made directly in a foreign country; Like building a plant to bottle Coke in Mexico. Multinationals may make foreign direct investments in order to support their overall operations; Like IBM buying a chip maker in China. Here is the connection: Multinationals make foreign direct investments to support their international businesses or to save money. Bottom line, they invest in a foreign country to get a return on their Investment (ROI) in the form of increased product sales, cost savings or more productivity. This could include operational efficiency (cheaper manufacture) or access to foreign labor markets.
