Benefits of FDI to Home Country
FDI or Foreign Direct Investment is defined like a firm that invests in establishing and building new branches in several other nations. This kind of international investment benefits both the organization and also the countries where the investment is made. For instance, investing in an underdeveloped country offers income to local people while protecting the organization from recessions. More benefits of FDI to home country are listed below.
1. Creates new employment
FDI benefits the home country with the creation of employment. It also assists in ensuring the workers are paid better salaries. This allows them to have an access to an improved lifestyle as well as more facilities. The manufacturing and production sector is greatly developed in the home country due to FDI investment. This increase in new industries is beneficial creating new employment.
2. New technology
Foreign direct investment benefits the host country through introducing advanced skills and technology. New research will be conducted in that home country as the international organization looks for methods of enhancing its services. This leads to better technology that can be applied in other parts of the nation for further development.
3. Improves export
The other vital advantage of FDI to the home country is that it enables these nations to enhance their export resources. Furthermore, research shows that nations who get FDI from other international organizations usually have lower interest rates. This means that their exported products are much cheaper and thus enhances export.
4. Increases income
Income generated through taxation is increased by FDI investment. Actually, FDI plays an important role with regards to the increase in productivity of home countries. It improves the local economy and living standards as well.
The shortcoming of FDI to the host nation is that it may cause pollution, particularly where the environmental laws have not been clearly defined.