Foreign Direct Investment (FDI) generally refers to the inflow and outflow of money and funds from one country to another country by the means of business transactions. Foreign direct investment is defined as the investment by an investor of one country in the business operated in other country and take a control over its activities by gaining the voting right which can only be attained if the investor has grabbed a 10% or more share in the company as per International Monetary Fund (Kornecki, 2013). The economy of Venezuela is dominated by oil and gas industry as there is a presence of huge reserves of oil and gas in the country. GDP per capita of Venezuela is $13600 (The New York Times, 2014). This paper mainly focuses on the trend and profile of inward and outward FDI flow in Venezuela over the 20 years. Inward foreign direct investment refers to the inflow of the investments made by the foreign investors in terms of money, technology and transfer of knowledge in the country. On the other hand outward foreign direct investment refers to the outflow of funds, technology, resources and knowledge from the country to another country. Foreign direct investment helps in accelerating economic growth and prosperity by creating new employment opportunities in the country.
Inward and outward FDI Flows: Venezuela
United States is considered as the largest recipient of FDI flows in the world with a contribution of approximately 25% of the whole world. There are different factors which makes a country attractive for foreign direct investments. United States is considered as the most attractive destination for inward as well as outward foreign direct investment due to presence of certain factors such as availability of skilled and cheap labor, expansion of the local market, availability of natural resources and existence of stable political and economic systems. It is considered as the largest economy of the world and has an active participation in FDI in the highly competitive international market. Outward FDI is distributed in different sectors such as manufacturing, services, finance, information and so on but the dominant industries or sectors include manufacturing, and services and holding companies in service sector. Majority of the outward FDI from US has been taken place in the manufacturing sector in terms of employment. On an average, outward FDI flow from US in terms of employment in manufacturing sector for the period of 2000-2011 stood at 5221 thousand (Kornecki, 2013).