Foreign Direct Investment or the FDI is known to have a big impact on the growth of a country. It is mostly understood that the host country benefits the most from it. While the effect of it has been counted measurable, but there haven’t been any serious reports to account for the fact.

Many countries have been routinely engaging in the promotion of FDI. Hence there is bound to be some benefit deriving from the business. Here are the lesser known facts about what FDI does to an economy.

  • Growth rate influence

Foreign Direct Investment has brought about a positive graph for the growth of an economy when the mode is selected for a growing economy or a stable country. As far as poor economies or small countries are accounted, Foreign Direct Investment does not bring much of growth to them.

  • Complementary investment

Countries need to be more cautious about their decisions of bringing FDI in their economy. As FDI hampers the local markets and local industry the most – it is generally the country that would suffer. How much is too much should be known beforehand?

  • Loss of local markets

With Foreign Direct Investment comes a new segment of the market into the country. Not only does it bring competition for the local industries but it makes them thrive for the market that they had created for themselves. Businesses suffer big time in fighting with the foreign brands and making a place of their own in their own economy.

  • Enhancing human capital

Human capital, labors, employment gets a positive graph with FDI as well. As the business improves, so does the opportunities for the people has to be economically flourished!

Foreign Direct Investment is a great idea for a developing economy. But too much of it can capture the economy’s market and slow the growth also.

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