You are working for a company that is considering investing in a foreign country.Investing in countries with different traditions is an important element of your company'slong-term strategic goals. As such, management has requested a report regarding theattractiveness of alternative countries based on the potential return of FDI.Write your report to discuss how you would measure country attractive and eventuallymaking a investment choice in a particular country.

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are working for a company that is considering investing in a foreign country.
Investing in countries with different traditions is an important element of your company's
long-term strategic goals. As such, management has requested a report regarding the
attractiveness of alternative countries based on the potential return of FDI.
Write your report to discuss how you would measure country attractive and eventually
making a investment choice in a particular country.

Expert Solution

Step 1: Understand Measuring country attractiveness for FDI

To measure country attractiveness for foreign direct investment (FDI), I would consider a variety of factors, including:

Economic factors: Economic growth, GDP per capita, inflation rate, exchange rate stability, trade openness, and market size.
Political factors: Political stability, government corruption, regulatory environment, and investment protection.
Social factors: Education level, workforce productivity, infrastructure quality, and quality of life.

We would collect data on these factors from a variety of sources, including government reports, international organizations, and private sector consultancies. And then use this data to create a weighted index of country attractiveness. The weights would be assigned based on the relative importance of each factor to my company.

Once we created the index, We would rank the countries in the list of potential investment destinations. The country with the highest ranking would be considered the most attractive for FDI.

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