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The second sort of FDI is developed by Raymond Vernon in his product cycle speculation. In response to this model the company shall invest as a way to acquire entry to cheaper elements of manufacturing, e.g. low-cost labour. The federal government of the host nation might encourage one of these FDI if it is pursuing an export-oriented growth technique. Since it could provide some type of funding incentive to the overseas company, in form UGG Boots On Sale of subsidies, grants and tax concessions. If the government is using an import-substitution coverage as a substitute, international firms may solely be allowed to participate in the host economic system in the event that they possess technical or managerial know-how that's not out there to home industry. Such know-how could also be transferred by way of licensing. It will probably also result in a joint venture with a local associate.
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