Lesson 19 Foreign Direct Investment •Foreign direct investment is the major form of international investment, whereby （through FDI） residents of one country acquire 获得 assets in a foreign country for the purpose of controlling and managing them. Why does FDI occur? An instinctive 本能的 answer to the question by many people may be that the rates of investment returns （投资回报率）are higher in a foreign country. This answer, though seemingly似乎 plausible似乎有理的 , is actually farfetched 牵强的. Just think of the fact that Britain is both a major source of FDI in the United States and an important destination for FDI from the country. We cannot say the rates of investment returns in the United States is at the same time higher than those in Britain (which explains investment into it) and lower (which justifies 说明… 的理由 capital flow to the opposite direction). 我们不能说，因为美国的投资收益率高于英国的投资收益率，所以资金流向美国。同时，又因为美国的投资率低于英国的投资率，所以资金又同时流向英国。 We should therefore look for more specific factors influencing a firm’s decision to u ndertake（to engage in从事） FDI. Controlling costs is the first major motivation for engaging in FDI. And lowering ①produ ction costs is an important consideration. A foreign country may have lower The USA Source Destination The UK Source Destination land prices, tax rates or cost of labor, all of which will reduce the production costs to a considerable degree, making foreign locations more attractive. ② Transportation cost which may be very significant很大 for some products such as beverages will also encourage an enterprise to engage in production in the foreign market through FDI to save 节省 the fees for long distanc...
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