Facebook Pixel Code
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Benefits of Foreign Direct Investment Essay Example

Show related essays

Benefits of Foreign Direct Investment

This is a preview of the 11-page document
Read full text

Benefits of Foreign Direct Investment. The research has identified that today, FDI is a part of most global economies and it plays an important role in the development of an economy of a country. It is now a fundamental part of the world’s financial system. FDI has raised the growth rate of the economies of developing countries and allowed them to grow faster than developed countries. There are many benefits of FDI in developing countries. The transfer of technology is not only restricted to actual technologies but also involve transfer of skills, methods of manufacturing and even entire facilities. It may as well refer to knowledge passed by institutions of higher learning and research. The inflow of FDI helps in transferring of these technologies and knowledge from one country to another.

For example, Asians had vast knowledge in IT sector and this knowledge was transferred to other countries of the world. FDI offers developing countries with cheap access to new technologies and knowledge thus improving their technological capabilities and ability to compete with others in the global markets. FDI assumes the responsibility of creating new jobs as well. As new firms establish their corporations in host countries, they create new jobs and opportunities. In 1997, it was estimated that close to 27 million jobs in developing countries were directly created by FDI. A real case is a Botswana where between 2003 and 2009, LionOre mining company from Canada created the highest number of jobs of about 4667.   In addition, it was also reported that for job directly created by FDI, about 1.7 other jobs were indirectly created. The created new jobs increase the income of the workers and leads development of competition. New jobs also raise the buying power of the population which in turn boosts the economy of the host country.  However, FDI is often attracted to developing countries with more and highly skilled and literate labor force. FDI will only increase the growth of an economy if the level of education in the host country is high. FDI also offers most women with employment in developing countries. With the increase in salaries, the employed citizens access better lifestyle and more facilities. Benefits of Foreign Direct Investment.

This is a preview of the 11-page document
Open full text



Aaron, C. (1999). The Contribution Of FDI To Poverty Alleviation Report from the Foreign Investment Advisory Service presented at a conference in Singapore

Aitken, B; Hanson, G.H; and Harrison, A. (1997). Spillovers, Foreign Investments, and Export Behaviour, Journal of International Economics, 43

Bleaney, M (1993), Political Uncertainty And Private Investment in South Africa, Credit Research Paper no. 93/15, University of Nottingham

Blomstrom, M. & Kokko, A. (1998). Multinational Corporations and Spillovers. Journal of Economic Surveys 12

Bradshaw, Y.W (1988) Reassessing Economic Dependency and Uneven Development: The Kenyan Experience. American Sociological Review, 53

Dornbusch, R and Reynoso A. (1989). Financial Factors in Economic Development, American Economic Review Papers and Proceedings, vol.79

Dunning, J (1993), Multinational Enterprises and the Global Economy, Reading, Mass: Addison-Wesley

Flamm, K. 1984. The Volatility of Offshore Investment. Journal of Development Economics.16

Harrison, A. (1996). Determinants and Effects of Direct Foreign Investment in Cote D’ivoire, Morocco, and Venezuela. In M. Roberts & J. Tybout (Eds.), Industrial evolution in developing countries, micro patterns of turnover, productivity and market structure. New York: Oxford University Press.

Levis, M. 1979. Does Political Instability in Developing Countries Affect Foreign Investment Flow? An Empirical examination. Management International Review 19

Morrisset, P. (2000). Foreign Direct Investment To Africa: Policies Also Matter. Transnational Corporation 9

Mwilima, N. (2003). Foreign Direct Investment In Africa. Johanesberg: Labour Resource and Research Institute.

Owen, R.F. 1982. Inter-industry Determinants of Foreign Direct Investments: A Canadian Perspective. In A.M. Rugman, ed., New Theories of Multinational Enterprise. London: CroomHelm.

Root, F. and A. Ahmed. 1979. “Empirical Determinants of Manufacturing Direct Foreign Investment in Developing Countries”. Economic Development and Cultural Change 27

Close ✕
Tracy Smith Editor&Proofreader
Expert in: Macro & Microeconomics, Human Resources, Management
Hire an Editor
Matt Hamilton Writer
Expert in: Macro & Microeconomics, E-Commerce, Finance & Accounting
Hire a Writer
preview essay on Benefits of Foreign Direct Investment
WE CAN HELP TO FIND AN ESSAYDidn't find an essay?

Please type your essay title, choose your document type, enter your email and we send you essay samples

Contact Us