When a state company is sold to foreigners in a country, people who live in that country generally do not like it. Because the company is sold to foreigners. People are acting with a sense of nationalism.

On the other side if there is an economic crisis or economic recession in that country, foreign investment is needed and the money is very important for the development of the country.

How foreign investment can be interpreted for a country? Is Foreign investment good or bad for a country?

  • $\begingroup$ If my answer was helpful please upvote/accept the answer! Thanks! $\endgroup$ – M3RS Aug 26 '17 at 6:51
  • $\begingroup$ This question could be improved by editing it to ask about possible advantages and disadvantages, rather than using evaluative terms (positive / negative; good / bad). As it stands, it may be closed as off-topic because it invites opinion-based answers. $\endgroup$ – Adam Bailey Aug 26 '17 at 20:05

From a purely economic perspective, it doesn't make sense to feel resentful when a national company is sold to foreigners. Imagine a company in my country is sold to a German investor. This shouldn't be a problem, as from the sale price my country could go to Germany and buy a German company instead. So it's all fair game.

However, some countries are growing in influence relative to others. For example, China is growing in influence and economic power relative to the rest of the world. When Chinese companies buy European companies, this is a very obvious sign of that growing influence and this is one reason it raises concerns in the countries that are being targeted. It is hard to accept that one's country might be losing in relative influence.

From a strategic point of view, it might make sense to try and protect national companies from foreign buyers. If the Chinese buy a German company, they might get access to new technology, which can help them develop their own industries. This can lead to increased competition for the German industry. By protecting national companies and proprietary technologies, Germany can limit competition and stay more competitive on the world stage.

The above discussion covers the buying and selling of existing assets, which is usually more controversial. Foreign investment in greenfield projects (when a foreign company builds a completely new factory) is generally considered positive for the national economy as it creates jobs and generates additional tax revenue for the government.

  • $\begingroup$ -1 Although you answer makes some good points, I am downvoting it because I judge the question as currently worded to be off-topic. This is in accordance with guidance on meta here (economics.meta.stackexchange.com/questions/1662/…). If the question should be edited to become on-topic then I will be happy to withdraw my downvote. $\endgroup$ – Adam Bailey Aug 26 '17 at 20:21

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