Netherlands' Political Stability and the Attractiveness of FDI Essay

Netherlands policy-making Stability and the Attractiveness of FDI - Essay ExampleThe underlying cheer in undertaking FDI operations is to invest in low risk and spirited return markets and economies. In this regard, political stability and the risks posed by the political system in place in a given market or economy influence FDI across countries. Netherlands is a strong and favourable FDI savoir-faire in the European economies. The U.S is a primary foreign direct investor in Netherlands among other countries. On the identical note, Netherlands also invests in other countries, thereby undertaking an external FDI. Individuals, firms, and g overnments engage in FDI activities around the world, with high sensitivity being accorded to political systems and governance of the specific FDI destinations. This process encompasses strategic decision making, aided by PESTLE (Political, Economic, Sociological, Technological, Legal and Environmental factors) analysis and Porters five Diamon d model. These factors provide the environment of line of merchandise undertakings in the FDI context, with the Diamond model evaluating the competitive advantage of a nation in a given business aspect. The attractiveness of FDI in Netherlands is not only based on the political stability of the country over cadence, but also on social and economic pillars that promote FDI. These pillars are used in this opus to explain the attractiveness of FDI in Netherlands, but a lot of emphasis is accorded to Netherlands political and governance stability. The 4 attributes of the Diamond model are employed to present Netherlands as a suitable FDI destination, with a material emphasis on the Netherlands political environment. The political aspect of the Netherlands is therefore the central focus of this paper, with regard to FDI attractiveness. Political Environment as a Determinant of FDI FDI destinations are critically scrutinized in a bid to ameliorate risk of failure. An economy that is characterized by effective governance systems attracts high levels of inward FDI and encourages its investors to engage in outward FDI in similar economies. Such a political environment is business friendly and it is often characterized by low corruption practices and fair and healthy competition in business (Holland Gateway, 2011). Unstable governments drive out-of-door inward FDI due to the prevalence of an environment that is highly characterized by investment risks. Other determining factors of FDI acknowledge legal systems (Baltzer, 2008, p.81 Markusen, 2002, p.67), economic context (OECD, 2002a), foreign relations (Breuss, 2002, pg.245-274), infrastructure and technology (Angeloni, Flad and Mongelli, 2007, pg. 367-409) and social and cultural factors (Roland, 2005, Ch. 3 Roland, 2009 Darvas and Szapary, 2008, pg. 44). Attractiveness of FDI in Netherlands Netherlands is an invest destination for many foreign individuals, firms and governments. The United States has for a lon g time been a major FDI player in Netherlands. In fact, the U.S has at one time accounted for up to 13.3% of chalk up outbound investment in Netherlands (Encyclopedia of the Nations, 2012). This scenario has been accounted for by a fiscal climate that favours high level investments and international orientation that boosts business undertakings between Netherlands and the rest of the world. U.K and Canada joins the U.S to make the top three countries that actively engage in inward FDI in