Read the extract below and answer the questions that follow. Foreign Direct Investment for Development Foreign direct in

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Read the extract below and answer the questions that follow. Foreign Direct Investment for Development Foreign direct investment (FDI) is an integral part of an open and effective international economic system and a major catalyst to development. The main factors motivating FDI in recent decades appear to have been the availability of natural resources in the host countries (and, to a lesser extent, the size of the domestic economy. Yet, the benefits of FDI do not accrue automatically and evenly across countries, sectors and local communities. National policies and the international investment architecture matter for attracting FDI to a larger number of developing countries and for reaping the full benefits of FDI for development. The challenges primarily address host countries, which need to establish a transparent, broad and effective enabling policy environment for investment and to build the human and institutional capacities to implement them Developing countries, emerging economies and countries in transition have come increasingly to see FDI as a source of economic development and modernisation, income growth and employment. Countries have liberalised their FDI regimes and pursued other policies to attract investment. They have addressed the issue of how best to pursue domestic policies to maximise the benefits of foreign presence in the domestic economy. The study Foreign Direct Investment for Development attempts primarily to shed light on the second issue, by focusing on the overall effect of FDI on macroeconomic growth and other welfare-enhancing processes, and on the channels through which these benefits take effect. The overall benefits of FDI for developing country economies are well documented. Given the appropriate host-country policies and a basic level of development, a preponderance of studies shows that FDI triggers technology spillovers, assists human capital formation, contributes to international trade integration, helps create a more competitive business environment and enhances enterprise development. All of these contribute to higher economic growth, which is the most potent tool for alleviating poverty in developing countries. Moreover, beyond the strictly economic benefits, FDI may help improve environmental and social conditions in the host country by, for example, transferring “cleaner” technologies and leading to more socially responsible corporate policies. Source: https://www.oecd.org/investment/investm ... 959815.pdf Answer ALL the questions in this section.
Question 1 (25 Marks) The main factors motivating FDI in recent decades appear to have been the availability of natural resources in the host countries and, to a lesser extent, the size of the domestic economy. Assume a Multinational Company based in Germany is considering investing directly in an Angola company. With reference to a framework established by Dunning, discuss the major motives that would have been considered in making this decision.
Question 2 (25 Marks) The benefits of FDI are real, but they do not accrue automatically. To reap the maximum benefits from foreign corporate presence a healthy enabling environment for business is paramount, which encourages domestic as well as foreign investment, provides incentives for innovation and improvements of skills and contributes to a competitive corporate climate. . With the aid of examples and reference to the case study, identify and explain in detail the benefits of FD