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The issue of rates of return on foreign owned companies through foreign direct investment On Wednesday Oct 25th2000at a meeting in Montreal the finance Minister of Canada Mr Paul Martin in his opening address to the G20 group on promoting Globalization stated that globalization will have a more human face with measures to ease financial crises and social safety nets to protect the poorest The meeting concluded with all the participants agreeing on a package of measures which they say will lead to more financial stability in the world From a political perspective this endorsement may seem realistic However this futuristic goal will require more foreign direct investment from corporations and other sources of private enterprise at a time when most expatriate firms are complaining about the decline of the ROA rate of return of foreign owned companies specifically in the USA Firms based in one country increasingly make investments to establish and run business operations in other countriesUS firms invested US133 billion abroad in 1998while foreign firms invested US193 billion in the USOverall world FDI flows more than tripled between 1988 and 1998from US 192 billion to US600The share of FDI to GDP is generally rising in both developed and developing countries In addition to this information the World Bank further stated that developing countries received about one quarter of the world FDI inflows in 1998-1998 on an average though the share fluctuated quite a bit from year to year It would seem that this is the largest form of private capital inflow to developing countries This data will seem to encourage more foreign investment Hence one will ask if there are truly low rates of returns on investment by foreign owned companies If this is the case then why are there so many foreign direct investment by small as well as multi-national corporations In order to answer this question there must be an examination of the actual low rates of return
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