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Technological changes particularly in the space-shrinking technologies of transport and communication help to make possible the internationalization of economic activity and the development and geographical spread of transnational corporations Dicken 1992 p120 These changes have made a great explosion in Foreign Direct Investment FDI in the last 20 years throughout the world FDI has been growing at a high rate and trade barriers have fallen extensively at the same time De Santis and Stahler 2003 Javalgi Griffith and White 2003 FDI itself is a form of investment that is best suited to provide risk sharing in a world economy where financial contracts are plagued by imperfect enforcement mechanisms Albuquerque 2003 There are numerous factors that can influence a firms decision to undertake FDI Some FDI may be undertaken to reduce the firms costs some of the decision to engage in FDI may be affected by such demand factors as developing access to new customers exploiting competitive advantages etc In addition political considerations and environmental issues may also play a role in FDI Mahoney Trigg Griffin and Pustay 2001 In short the fundamental purpose of any business firm to engage in FDI of course is to make a profit Hill 2000 One of the examples of FDI is the foreign investment made by Citigroup Inc to buy South Koreas KorAm Bank for US 27 billions Under the cautious agreement the worlds largest lender will pay about 3 trillion won or about 16000 won per share for KorAms stock Jae-kyoung 17 February 2004 Agence France Presse English 23 February 2004 The question is why a company like Citigroup Inc does not bulk up on consumer bank acquisitions in its domestic market as what their rivals such as Bank of America and JP Morgan has done Furthermore Reuters reported that Citigroup Inc is looking for growth in Asias developing markets after already buying banks in Mexico and Poland Its a large under-served market from our point of view
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