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An Analytic Frame of Reference for Direct Investment

In: The Economics of Business Investment Abroad

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  • H. Peter Gray

Abstract

Direct investments that result in the creation or the expansion of a foreign subsidiary enterprise can be seen as permanent commitments of capital on the part of the investing corporation. These subsidiaries will have an impact upon the character of the host economy and upon the rate and composition of its output. Through their repatriation of profits to the parent corporation and their trading relations with the parent itself and with other related subsidiaries in third countries, a foreign subsidiary will have an enduring effect upon the host nation’s international accounts and upon its pattern of trade. A third possible effect is that the subsidiary-parent relationship will expedite the transmission of technological knowhow between the two nations to the benefit of either or both. An overall assessment of the benefits that derive to both nations from the act of investment is a complicated matter — primarily because of the large number of dimensions involved in the process.

Suggested Citation

  • H. Peter Gray, 1972. "An Analytic Frame of Reference for Direct Investment," Palgrave Macmillan Books, in: The Economics of Business Investment Abroad, chapter 0, pages 27-70, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-1-349-01687-7_2
    DOI: 10.1007/978-1-349-01687-7_2
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