Foreign Direct Investment & Regulatory Environment

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Week Two ~ Foreign Direct Investment and Regulatory Environment

University of Phoenix

MGT 448~Global Business Strategies

March 16th, 2009



Foreign Direct Investment and Regulatory Environment

This paper will compare the foreign direct investment environment and regulations of Aruba, Haiti, and Dominican Republic. The organization is considering opening a new factory in the Caribbean, and management is in the process of evaluating the specific country locations for this direct investment. This paper will define foreign direct investment and discuss the advantages and disadvantages. The paper will also relate the stage of foreign direct investment to business opportunities.

One variable commonly used to measure where and how fast internationalization is taking place is the increase in total foreign direct investment (FDI). According to Hill, 2009 "Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or market a product in a foreign country" (p.

242). FDI can provide an organization with new markets, less expensive facilities, and access to new products, financing, and skills. There are advantages to FDI into countries such as job growth in a depressed country, financial gain to the country's economy, education of the citizens, and inexpensive labor costs for the organization moving into a specific country thus leading to a higher profit. The disadvantages of FDI are too much growth in a short time frame leading to overcrowding and pollution of a city, increased crime, and a loss of culture.

Political, Legal, and Regulatory Environment for Aruba

The island of Aruba is located in the middle of the southern Caribbean approximately 15 miles off the coast of Venezuela. The island is 19.6 miles long and 6 miles across at its widest point, with a...