Who benefits from FDI?
FDI stands for Foreign Direct Investment. It is an investment made as a controlling ownership or interest to a business in a country by another enterprise of another country. Both the investor country and the target country are benefited from the FDI. As stated by Strauss, & Mavroeidi (2017) the FDI created new job opportunities and roles. The investing country builds new companies and operating units in the target country, hence the inhabitants of the target country get the opportunity to be employed. Eventually, the economy and economic framework of domestic country is developed (Strauss, & Mavroeidi, 2017). Same as that, the investor country is benefited from FDI as they acquire the foreign business operations and capital interest.
Would you argue for or against a country blocking FDI? Why?
FDI could hinder the domestic investment. Moreover, due to the political turmoil and changes in policy, the FDI could face risks. However, FDI involves several benefits. The FDI fosters economic growth (Gunby, Jin, & Reed, 2017). FDI allows to bring economic, and social improvements in the backward areas (Maithra, 2017). For instance, FDI on Sriperumbudur’s Hyundai unit have developed the backward rural areas of Tamilnadu, India. It also improves the capital flow within the investor and home country (Maithra, 2017). Moreover, the FDI creates job opportunities. For instance, 7.4 million people in USA have
been employed in the farms owned by foreign country (SelectUSA.gov, 2020). The FDI have enormous contribution in increasing exports and the earnings from exports. For instance, the income from export of US reached to US$382.7 billion due to the FDIs. FDI has significant contribution in shaping economy for both the parties and hence it should not be blocked.
Benefits of Foreign Direct Investment | SelectUSA.gov | SelectUSA.gov. (2020).
Retrieved 1 April 2020, from https://www.selectusa.gov/FDI-benefits
Gunby, P., Jin, Y., & Reed, W. R. (2017). Did FDI really cause Chinese economic growth? A meta-analysis. World Development, 90, 242-255.
Maithra, D. (2017). Foreign direct investment and economic growth in India. IJAR, 3(5), 308-311.
Strauss, I., & Mavroeidi, V. (2017). How India can benefit from FDI: lessons from China.