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Foreign Direct Investments (FDI) in the classical form – are a process where a company from one country carries out physical investment to build a factory in another country. In fact, this was a discovery of the company by a foreigner. The definition could be broadened to include those investments that are made in businesses operating in a foreign investor for the economy. The relations in FDI are constructed as follows. Main Company + foreign branch, together formed transnational corporation. For investments to be classified as FDI, they must be big enough to allow the parent company to control the foreign department. The IMF defines control in this case, as the possession of at least 10% of the common stock, or an equivalent force in voting. Investments in amount less than 10% are positioned as portfolio investment. History After the Second World War, global FDI was typical mainly for the United States as a world recovering from the effects of war. The USA possessed for about three-quarters of all made FDI (including reinvested earnings) in the period from 1945 to 1960. Since then, FDI became a global phenomenon and no longer the privilege of OECD. The importance of FDI in the global economy has increased, at the present time FDI is up 28% of world GDP. Criticism In the US, in the late 60’s – early 70’s outward investment was very politicized. Trade union organizations believed that such investments abroad export jobs, they launched a campaign to lobby the tax reform, which affected the regulation of FDI. Nixon’s Administration, influential members of Congress from both parties, and well-financed lobbying organizations came to the defense of TNCs. Counterattack of TNCs and their allies succeeded, and they were able to protect their interests.

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