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Literature Review United States of America

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Literature review
United states of America

All the countries in the world are continuously striving for rapid economic growth and as a result they are inviting more and more investments by allowing foreign investors to invest in their land. There are several factors that help or hinder the economic growth of a country, and the factors, that are often identified as stimulants (World Investment Report UNCTAD, 1994) for a country’s growth are: (1) Large amounts of investment capital, (2) Advanced Technologies, (3) Highly skilled labor, (4) Well-developed transportation and communication infrastructure, (5) Stable and supportive political and social institutions, (6) Low tax rates, and (7)
Favorable regulatory environment. Differences in the growth rates of the countries are explained by the differences in the endowments or levels of these factors (Dondeti and Mohanty, 2007).
FDI has long been recognized as a major source of technology and know-how to developing countries. Indeed, it is the ability of FDI to transfer not only production know- how but also managerial skills that distinguishes it from all other forms of investment, including portfolio capital and aid. While foreign portfolio investment may, in some cases, contribute to the capital formation in a developing country, often, the capital flows via this route are limited, and above all, they do not provide the advanced technologies needed to compete in the world markets. FDI can accelerate growth in the ways of generating employment in the host countries, fulfilling saving gap and huge investment demand and sharing knowledge and management skills through backward and forward linkage in the host countries (Frenkel et al., 2004). Moreover, the very presence of foreign owned firms

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