The Role of Direct Investment in Shaping Foreign Trade (in the Case of Countries)

Abstract

Direct investment plays a significant role in shaping foreign trade by influencing the movement of goods, services and capital between countries. This article explores the various ways in which direct investment impacts foreign trade, such as increasing trade volume, facilitating technology transfer, diversifying exports, creating jobs, and enhancing market access. By establishing production facilities, distribution networks, and sales outlets in foreign markets, direct investment can stimulate economic growth, promote innovation, and foster international trade relations. The transfer of technology and expertise from investing countries to host countries can lead to improved competitiveness and productivity, while job creation and market expansion can enhance a country’s export capabilities.