What is international investment? How does it affect the national economy?

1. What is international investment?

International investment is when investors from one country (either individuals or organizations) bring capital or other values ​​to another country to carry out production, business or other activities with the aim of making a profit or achieving social efficiency.

International investment activities often involve investing money, assets, technology, human resources, or other resources from one country to another.

The purpose of international investment is to develop or expand business activities. International investment activities include:

• Establishing a business
• Acquiring a company
• Investing in a new project
• Investing in the financial market – securities of that country.
• …

International investment can bring economic benefits to both parties, as well as contribute to international cooperation and development. Currently, we can encounter 3 types of international investment as follows:

• Foreign Direct Investment (FDI): This is a form of direct investment from foreign investors, the attracting and receiving side of the investment can be a business from another country.
• Foreign Portfolio Investment (FPI): Investors buy securities from companies and organizations located in other countries with a certain level of control to earn profits.
• Official development assistance (Official Development Assistance): These are usually interest-free loans, or very low interest rates. ODA capital is often considered aid from major countries to the governments of developing or underdeveloped countries.

2. Characteristics of international investment

International investment is a multidimensional and complex activity, characterized by a number of important characteristics. Below are some points of sharing and analysis of the outstanding characteristics of international investment:

• International investment is global in nature, going beyond the territorial limits of a particular country.
• The main goal of international investment is often to gain profits or optimize financial benefits based on the economic characteristics, potential and risks of the country receiving the investment.
• Accompanying the transfer of technology and knowledge from one country to another, helping to improve technical and production development in a country. However, it also raises questions about intellectual property protection and technology ownership.
• International investment often faces changes in the business and political environments of both countries involved.
• Comply with the laws and regulations of both countries involved, including regulations on tax, customs, intellectual property rights, etc.

In short, international investment requires investors to have a deep understanding of global economics, politics, and society, as well as the ability to assess risks and manage them intelligently.

3. Impact of international investment

International investment affects both countries involved, bringing both positive and negative impacts, and causing many multi-dimensional effects:

• Job creation: International investment often creates new job opportunities for countries, helping to reduce unemployment and increase workers’ income.
• Technology transfer: International investment activities are often accompanied by the transfer of technology and knowledge, improving production capacity and living standards.
• Contribution to the budget: International investment generates tax and import duties, contributing to the national budget and promoting economic diversification.
• Social impact: Improving living conditions and standards health and education, but poses challenges to labor rights and social protection.

However, when receiving investment capital from abroad, domestic enterprises also face great and unbalanced competitive pressure. Not to mention:

• Weakening national sovereignty: In some less developed countries, the power of multinational corporations (MNCs) is so great that they have an impact on both sovereignty and important national decisions.
• Causing income inequality: Employees working at MNCs, especially those from the country of origin The superiority of these multinational companies will be paid higher than the average salary in that country. This leads to income inequality.
• Environmental pollution: Many MNCs choose countries with more relaxed environmental regulations and no really strict sanctions to avoid environmental responsibilities. This has added to the burden of local pollution.

Conclusion

The above are our shares on international investment. International investment activities create many important factors in the development of the world economy. Understanding and applying international investment concepts is very important for financial experts and investment managers, especially in an increasingly globalized financial market.