Foreign direct investment its advantage and disadvantage

Foreign direct investment is when an individual or business owns 10 percent or more of a foreign company. If a (person or business who gives money to help start a business) owns less than 10 percent, the International Money-based Fund defines it as part of his or her stock (mix of stocks, bonds, etc./document collection).
A 10 percent ownership doesn't give the (person or business who gives money to help start a business) a controlling interest. It does allow influence over the company's management, operations, and policies. For this reason, governments track who invests in their country's businesses.
In 2016, worldwide FDI was $1.75 trillion, according to the United Nations. It had fallen 2 percent from 2015's record of $1.76 trillion.
Importance of FDI
Foreign direct investment is critical for developing and newly appearing market countries. Their companies need the huge companies' money/giving money (to) and (ability to do things very well) to expand their international sales. Their countries need private investment in (basic equipment needed for a business or society to operate), energy, and water to increase jobs and wages. The UN report warned that climate change would hit them the hardest.
In 2016, developing countries received 37 percent of total worldwide FDI. They had 43 percent in 2015. The downturn was due to slower growth in rich countries. The United States (process of people making, selling, and buying things) only grew 1.5 percent, compared to 2.9 percent in 2015. The UN forecast that an improving (process of people making, selling, and buying things) in 2017 will increase world FDI to $1.8 trillion.
The developed (processes of people making, selling, and buying things), such as the (related to Europe) Union and the United States, also need FDI.
Their companies do it for different reasons. Most of these countries' investment is via mergers and purchases between mature companies. These worldwide corporations' investments were for either breaking down and rebuilding or refocusing on core businesses.
Advantages
Foreign direct investment benefits the (world-wide process of people making, selling, and buying things), as well as (people or businesses who give money to help start businesses) and receivers.
Capital goes to the businesses with the best growth prospects, anywhere in the world. That's because (people or businesses who give money to help start businesses) look (for) the best return with the least risk. This money-based reason for doing something is color-blind and doesn't care about religion or politics.
That gives well-run businesses, (without any concern about/having nothing to do with) race, color or religious belief, a competitive advantage. It reduces the effects of politics, (giving friends really good jobs), and (the crime of paying money to get favors). As a result, the smartest money rewards the best businesses all over the world. Their products (that are bought and sold) and services go to market faster than without (having no limits, rules, or barriers) FDI.
Individual (people or businesses who give money to help start businesses) receive the extra benefits of lowered risk. FDI diversifies their holdings outside of a clearly stated/particular country, industry or political system. (getting involved with different types of things) always increases return without increasing risk.
Receiver businesses receive "best practices" management, accounting or legal guidance from their (people or businesses who give money to help start businesses). They can include/combine the latest technology, operational practices, and financing tools. By putting into use these practices, they improve their workers' (ways of living). That raises the standard of living for more people in the receiver country. FDI rewards the best companies in any country. It reduces the influence of local governments over them.
Receiver countries see their standard of living rise. As the receiver company benefits from the investment, it can pay higher taxes. Unfortunately, some nations offset this benefit by offering tax (rewards or reasons for doing something) to attract FDI.
Another advantage of FDI is that it offsets the dangerous nature/wild up and down prices created by "hot money." That's when (for only a short time) lenders and currency traders create a valuable thing bubble. They invest lots of money all at once, then sell their investments just as fast.
That can create a boom-bust cycle that ruins (processes of people making, selling, and buying things) and ends political governments in power. Foreign direct investment takes longer to set up and has a more permanent footprint in a country.
Disadvantages
Countries should not allow foreign ownership of companies in (related to winning a battle) important businesses. That could lower the (serving to compare two or more things) advantage of the nation, according to an IMF report.
Second, foreign (people or businesses who give money to help start businesses) might strip the business of its value without adding any. They could sell (losing money) parts of/amounts of the company to local, less fancy (or smart) (people or businesses who give money to help start businesses). They can use the company's (something of value that you'll lose if you don't pay back a loan) to get low-cost, local loans. Instead of reinvesting it, they lend the money back to the parent company.
Free Trade Agreements and FDI
Trade agreements are a powerful way for countries to encourage more FDI. A great example of this is NAFTA, the world's largest free trade agreement. It increased FDI between the United States, Canada, and Mexico to $452 billion by 2012. That was just one of NAFTA's advantages.
Foreign Direct Investment Statistics
Four (services businesses/government units) keep track of FDI statistics.
The UN Conference on Trade and Development publishes the Worldwide Investment Trends Monitor. It summarizes FDI (moves in a particular way/becomes popular) around the world. For example, UNCTAD reported that FDI set a record in 2012 of $1.5 trillion. It went past that record in 2015.
The Organization for Money-based Cooperation and Development publishes quarterly FDI statistics for its member countries. It reports on both inflows and outflows. The only statistics it doesn't (act of being taken or controlled by force) are those between the newly-visible markets themselves.
The IMF published its first Worldwide Survey of Foreign Direct Investment Positions in 2010. This once-a-year worldwide survey is available as an online (computer file full of information). It covers investment positions for 72 countries. The IMF received help from the (related to Europe) Central Bank, Eurostat, OECD, and UNCTAD.
The Bureau of Money-based Analysis reports on the FDI activities of foreign associates of U.S. companies. It provides the (related to managing money) and operating data of these associates. It says which U.S. companies were bought/owned/received or created by foreign ones. It also describes how much U.S. companies have invested across the ocean.