Foreign Direct Investment - Government Policy Instruments and FDI - Host Countries: Promotion

4 important questions on Foreign Direct Investment - Government Policy Instruments and FDI - Host Countries: Promotion

Name the two types of incentives for a host country to promote FDI:

- Financial incentives
- Infrastructure improvements

Host governments grant companies incentives by:

- giving tax incentives
- offer low-interest loans

What is a potential downside of such government incentives:

That companies start a bidding war to gain the most out of the options available
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Why would a country improve its infrastructure for a company?

Because it gives a lasting benefit to the community and invites companies to take advantage of the benefits

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