The effectiveness of capital transfer is influenced by both endogenous and exogenous factors. External factors, i.e. those not directly influenced by the company, include the market structure (degree of market
philippine cellphone number code differentiation and types of entry barriers), the technological conditions of a particular sector (consumer or investment goods) or the economic policy of the State. Internal factors include the scale and area of operations, absorption potential, financial capacity, the strategy used, etc. The reasons for the popularization of FDI are the liberalization of foreign economic policies, the high costs of innovation and the control and protection of intangible assets. Especially in emerging markets, they have become the main channel of access to valuable technology. Direct investment differs from indirect investment in that its main characteristics are the transmission of productive knowledge, technological solutions, transfer of new technologies, know-how, adaptation of modern management techniques, etc. There are 4 basic reasons for foreign expansion.
The first is the search for natural resources, labor or intangible resources (technological solutions, marketing and management knowledge and organizational capacity) when these factors are not available in the country of origin or are relatively more expensive.
Another strategy is called "market seeking," that is, trying to acquire, expand or maintain markets, as well as restrict the access of competitors.
The next motive may be efficiency-oriented when the investor perceives better conditions abroad for the exploitation of his capabilities, for example, the place may have more favorable economic policies.
The motive may also be to raise capital through mergers and acquisitions. This may allow an investor to expand its capital portfolio to maintain or strengthen its competitive position.