What is an external foreign investment?

In an increasingly globalized world, foreign investments are a strong force in the economies of most nations. Investors are acting to take advantage of lucrative investment opportunities abroad, while governments that want to strengthen their economies receive politicians to be attractive to foreign investors. When the country brings investments from abroad, it is an internal foreign investment. When an investor invests abroad, he is known as an external foreign investment. Every foreign investment is both inside and external, depending on the country from which it is discussed. Foreign investments can take the form of real estate or shares. Companies often make foreign investments buying shares in foreign companies. When they build enough inventory, a foreign company becomes a subsidiary of a company. The company that created an investment is known as the parent company. Government's attitude to these two is significantly different. Generally seeks to attract internal foreignInvesting by offering investors favorable conditions. Governments want to promote their domestic economies, so they can try to discourage discouraged foreign investments to maintain funds inside the country.

External foreign investment can be further divided into horizontal and vertical investments. When the company deals with horizontal foreign investments, it extends activities in which other markets already participate. For example, a company that produces cookies could buy shares in a foreign company Company, acquire control interest and transform a foreign company into a subsidiary of the investment company. Vertical investment means that the company invests in another segment of production and distribution chain. If Cookie wanted to get better ingredients prices, a foreign mill could turn into a subsidiary; If he had trouble selling cookies, he couldwould obtain a chain of foreign retail stores.

Investors often look for external foreign investments as an indicator of the health and stability of the country's economy. When countries are unstable or have bad economies, they create little if any external foreign investment at all. Instead, they try to gain as many foreign investments as possible to stimulate their economies. Once the economy works, people create wealth and grow to the point where they begin to look at the opportunities of expansion in other markets. Only then does the country have external foreign investment.