FDI
FDI or Foreign Direct investment as we read in the news papers today is
Putting the money of your country in a company which is functioning in some other country.
If we invest this way then we are ‘Foreign Direct Investor’
Advantages
1 We can influence the management of the company being a part of its shareholder.
2 Helps in spurring the development of a nation as we can gain a greater foothold in the world economy by getting access to a wider global market
3 It can introduce world-level technology and technical know-how and processes
4 As FDI brings in advances in technology and processes, it increases the competition in the domestic economy of the developing country, which has attracted the FDI. Other companies will also have to improve their processes and products in order to stay competitive in the market. Hence it will improve quality of a products and processes in a particular sector.
5 The training and skills up gradation can enhance the value of the human resources.
6 Access to a larger market in the host country.
7 Ability to tap the potential of a cheap and skilled labour, making use of resources in the host country.
8 Pursuing growth goals by diversification and optimising costs.
Disadvantages
1 The economically backward section of the host country is always inconvenienced when the stream of foreign direct investment is negatively affected.
2 The host country has to limit the extent of impact that may be made by the foreign direct investment. They have to make sure that the entities that are making the foreign direct investment in their country adhere to the environmental, governance and social regulations that have been laid down in their country lest they may be affected causing the deterioration of their working system.
3 The national secret of the host country gets affected as there may be lot of things which are not meant to be disclosed to the rest of the world. This may result to be a serious security hazard to the defence of the host country.
4 The foreign policies involved in the FDI may not be liked by the workers of host country.
5 It results into loss to the countries who want to invest on their own as they are deprived of that opportunity due to competition.
6 High travel and communications expenses occur.
7 The language and cultural barrier may pose problems between the investor and the host country.
8 It may be possible that a company may lose out on its ownership to an investor company. FULL ESSAY
