There have been many debates regarding the positive and negative effects of foreign direct investment with the host government caught in a love-hate relationship. On the one hand, the host country has to appreciate the various contributions , especially economic, that foreign direct investment can make. On the other, allowing investments from abroad gives rise to fears of dominance, interference, and dependence.
Pros
- Improved capital flows
- Technology transfer
- Regional development
- Increased competition that benefits the economy
- Favorable balance of payments
- Increased employment opportunities
Capital inflows that result from foreign direct investment benefit all countries by making more resources available, but it particularly benefits those nations with limited domestic sources and restricted opportunities to raise funds in the world’s capital markets. Jobs are often the most obvious reason to cheer about foreign direct investment. For example, U.S. subsidiaries of global companies employ 5.3 million Americans, about 4.7 percent of private sector employment, and support an annual payroll of $408 billion.
The combined effects of all the benefits accruing from foreign direct investment can lead to overall improvements in the standard of living in the host country, as well as increasing its access to and competitiveness in world markets.
Cons
- Low levels of research and development
- Risk of increase capital outflows
- Stifling of domestic competition and entrepreneurship
- Erosion of host culture
- Disruption of domestic business practices
- Risk of interference by foreign governments
From an economic perspective, capital inflows resulting from foreign direct investment are often accompanied by higher, longer term outflows that do not benefit the host government. For example, when multinational chains built hotels in the Caribbean, the shortage of local suppliers meant that much-needed foreign currency was spent on imported supplies. In other cases, multinationals prefer to use existing suppliers in their own countries rather than develop local supplier networks. Another frequent complaint is that investors fail to follow though on their promises.
Multinational companies are, by definition, change agents. That is, the products and services they generate and market bring about change in the lifestyles of consumers in the host country. For example, the introduction of fast-food restaurants to Taiwan dramatically altered eating patterns, especially of teenagers, who make these outlets extremely popular and profitable. Concern has been expressed about the impact on family life and the higher relative cost of eating in such establishments.
This is an excerpt from the book by: Michael R Czinkota, Ilkka A Ronkainen, and Michael H. Moffett. Fundamentals of International Business (New York: Wessex, 2015), 60.
Hi, Neat post. There’s a problem with your website in internet explorer, would test this… IE still is the market leader and a large portion of people will miss your excellent writing because of this problem.
Thank you, I’ve just been searching for information about this subject for ages and yours is the greatest I’ve discovered so far. But, what about the conclusion? Are you sure about the source?
N5Rgbh Major thankies for the post.Thanks Again. Want more.
I’m gratified with the way that michaelczinkota.com handles this sort of issue. Usually on point, often contentious, consistently thoughtful as well as stimulating.
Hello. fantastic job. I did not expect this. This is a fantastic story. Thanks!
Hi my loved one! I want to say that this article is amazing, great written and include approximately all significant infos. I would like to peer more posts like this .
I’m gratified by the manner in which michaelczinkota.com handles this kind of subject. Usually on point, often polemic, consistently well-researched and stimulating.
Fantastic site. A lot of helpful information here. I am sending it to a few friends ans additionally sharing in delicious. And certainly, thanks on your sweat!
10/5/2016 @ 21:21:34 In my view, michaelczinkota.com does a great job of handling subject matter like this! Even if ofttimes intentionally contentious, the information is generally thoughtful and stimulating.
10/4/2016 @ 14:07:38 says good work michaelczinkota.com!
Hello Web Admin, I noticed that your On-Page SEO is is missing a few factors, for one you do not use all three H tags in your post, also I notice that you are not using bold or italics properly in your SEO optimization. On-Page SEO means more now than ever since the new Google update: Panda. No longer are backlinks and simply pinging or sending out a RSS feed the key to getting Google PageRank or Alexa Rankings, You now NEED On-Page SEO. So what is good On-Page SEO?First your keyword must appear in the title.Then it must appear in the URL.You have to optimize your keyword and make sure that it has a nice keyword density of 3-5% in your article with relevant LSI (Latent Semantic Indexing). Then you should spread all H1,H2,H3 tags in your article.Your Keyword should appear in your first paragraph and in the last sentence of the page. You should have relevant usage of Bold and italics of your keyword.There should be one internal link to a page on your blog and you should have one image with an alt tag that has your keyword….wait there’s even more Now what if i told you there was a simple WordPress plugin that does all the On-Page SEO, and automatically for you? That’s right AUTOMATICALLY, just watch this 4minute video for more information at. Seo Plugin
Hello! I’ve been following your blog for a long time now and finally got the courage to go ahead and give you a shout out from New Caney Texas! Just wanted to say keep up the fantastic job!
Some genuinely good content on this internet site, thank you for contribution.
Unlimited Bandwidth SSD Cloud Servers try one month for FREE
See top 100 most popular items on Amazon.
I got what you intend,saved to fav, very decent web site. ajvmenxocf.xyz
Nice Artical.But what are pros and cons of FDI to LDC like Zambian, in AFRICA.