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Foreign Direct Investment & Regulatory Environment

1209 words - 5 pages

Foreign Direct Investment ….. PAGE \* MERGEFORMAT 1
Running head: FOREIGN DIRECT INVESTMENT AND REGULATORY ENVIRONMENTWeek Two ~ Foreign Direct Investment and Regulatory EnvironmentUniversity of PhoenixMGT 448~Global Business StrategiesMarch 16th, 2009Foreign Direct Investment and Regulatory EnvironmentThis paper will compare the foreign direct investment environment and regulations of Aruba, Haiti, and Dominican Republic. The organization is considering opening a new factory in the Caribbean, and management is in the process of evaluating the specific country locations for this direct investment. This paper will define foreign direct investment and discuss the advantages and disadvantages. The paper will also relate the stage of foreign direct investment to business opportunities.One variable commonly used to measure where and how fast internationalization is taking place is the increase in total foreign direct investment (FDI). According to Hill, 2009 "Foreign direct investment (FDI) occurs when a firm invests directly in facilities to produce or market a product in a foreign country" (p. 242). FDI can provide an organization with new markets, less expensive facilities, and access to new products, financing, and skills. There are advantages to FDI into countries such as job growth in a depressed country, financial gain to the country's economy, education of the citizens, and inexpensive labor costs for the organization moving into a specific country thus leading to a higher profit. The disadvantages of FDI are too much growth in a short time frame leading to overcrowding and pollution of a city, increased crime, and a loss of culture.Political, Legal, and Regulatory Environment for ArubaThe island of Aruba is located in the middle of the southern Caribbean approximately 15 miles off the coast of Venezuela. The island is 19.6 miles long and 6 miles across at its widest point, with a total area of approximately 70 square miles. The political environment in which Aruba operates is Parliamentary Democracy. This is a political system in which the parliament selects the prime minister and eight member cabinet. This type of government obtains a dual responsibility to both the citizens of the country and the parliament. According to Michigan State University (2001-2009), "In the parliamentary elections of September 23, 2005, the People's Electoral Movement (MEP) gained 11 of the 21 seats available" (para.3). The legal system in Aruba is based on Dutch civil law system, with some English common law influence (Central Intelligence Agency, 2009). The systems of government, education, social welfare and medicine remain similar to the Dutch standards. The legislature and the executives operate differently with regard to Aruba's legal system. The Common Court of Justice of Aruba and the Supreme Court of Justice in the Netherlands has jurisdiction (Michigan State University, 2001-2009). Aruba has a secure and stable business economy. Corporations...

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