Transnational companies and foreign direct investments

Abstract

Foreign direct investments (FDI), especially those of transnational companies, take shape through the transfer of modern technology including machinery and fixtures, precise technical documentation and know-how flows (technical and managerial assistance) as well as creating new work places. All this make the direct foreign investments an advantage for both the investing countries and host countries. For the investing countries the advantages materialize first through the use of cheap technological and human resources and by providing a market for the products in the host countries. Meanwhile the countries receiving foreign direct investments are ensured full and effective use of available inputs and the creation of favourable conditions towards the development of their productive capacity for export and last but not least, to achieve the goal of reducing unemployment by creating new work places.