reasons for international Movements of capital (2)

2- similarly ,because manufacturing and services production in developed countries is catering increasingly to high-income tastes and wants ,it can be hypothesized that developed-country firms will invest overseas if the recipient country has a high per capita income . This suggestion leads us to expect that there would be little manufacturing investment flowing from developed countries to developing countries.However,per capita income must be kept distinct from total income (GDP),since firms in developed countries are eager to move into China because of its sheer market size and despite its relatively low per capita income.
3- Anoter reason for direct investment in a country is that the foreign firm can secure access to mineral or row material deposits located there and can then process the raw materials and sell them in more finished from.Examples would be FDI in petroleum and copper.
4- It has also been suggested that firms may want to invest abroad as a means of risk diversification .Just as investors prefer to have a diversified financial portfolio instead of holding their assets in the stock of a single company ,so firms may wish to distribute their real investment assets across industries or countries.if a recession or downturn occurs in one market or industry,it will be beneficial for a firm not to have all its eggs in one basket.some of the firm is investment in other industries or countries may not experience the downturn or may at least experince it wit reduced severity.