International investing Essay Example | Topics and Well Written Essays - 750 words

International investing - Essay Example And it is usually easy for holders of corporate securities to sell their shares when the business is not doing well. The stockholders of a corporation risk only what they paid for their investment. The growth of international investors has greatly increased the degree of world wide economic and political interdependence. Over the past years, there has been an increasing amount of investment in the U.S. by foreign investors and in foreign nations by U.S. investors (Brigham, Houston, & Clark, 2004). These developments only suggest an increasing degree of mutual influence and interdependence among businessmen and nations, to which the United States is not immune. Here are the primary reasons why investors go â€Å"international†. a. HOME MARKET SATURATION. After a company has saturated its home market, growth opportunities are often better in foreign markets. These foreign markets will create the demand for its supply as they give the company new sets of consumers and eventually demand for new products will be discovered. b. SPECIALIZATION AND COMPARATIVE ADVANTAGE. Many of the present multinational firms began their international operations because raw materials were located abroad. Specialization and comparative advantage come in. Specialization is the division of productive activities among persons and regions so that no one individual or one area is totally self-sufficient (Miller, 2004). A firm can reduce its cost by simply obtaining raw materials in countries where the price is cheaper. Other firms have moved their manufacturing facilities overseas to take advantage of cheaper production costs in low-cost countries. And because no single nation holds a commanding advantage in all technologies, companies are scouring the globe for leading scientific and design ideas. c. UNFAVORABLE DOMESTIC BUSINESS REGULATIONS AND POLICIES. The prevailing business regulations