Business, Legal & Accounting Glossary
Inward investment is referred to as inoculation of money from any external sources. The main purpose of such an inoculation is to promote any company product or purchase any capital good. This process is familiar with any kind of branch of a corporation in order to establish or expand its existence in a province.
Here external sources can be transnational corporations or multinational corporations, which invest their money in several new industrial sites. This phenomenon takes place mainly in response to any kind of changes seen in any area where new investment by any company can be fruitful.
Sometimes it happens that there can be a sudden increase in population or betterment of the transport system, in this case, an investment by any company can be really fruitful. This type of investment can be referred to as an inward investment. Thus, in order to increase production or increase communication, inward investment is an essential component. There can be several benefits of inward investment. The main benefit is that it creates employment for any area, which leads to the development of that area. This way wealth is generated for any economy.
The main reason that lies behind the inward investment is that there are few areas where remoteness prevails. Sometimes any company intending to produce any new product by investing reasonably less money can choose such places where the wage rate is low and remote areas have fewer wage labourers. This low wage tendency arises due to unemployment or lack of similar jobs.
Like any other phenomenon inward investment also has its darker side. It is often found that some agencies or government authorities mainly concentrate on attracting inward investment to such a degree that domestic small business or entrepreneurs are neglected. Balance is often lost in this process, which is required to maintain the social environment. In order to maximize economic growth and maintain social welfare, there should be a balance between external investments and domestic investments. Financial investment activity practised in inward investment often leads to encouraging global capitalist ventures.
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This glossary post was last updated: 28th March, 2020 | 1 Views.