What Are The Advantages And Disadvantages Of Foreign Direct Investment?

This is a very subjective question. It will depend on the country that is being invested in, the industry where the investment is being made, the firm that is making the investment and amount of investment that is being made.

The pros of foreign direct investment are the flow of cash into the country. It will obviously stimulate economic activity in the country. Employment numbers will go up. Existing domestic producers will have to pull up their socks due to the onset of high quality competition. The international community will sit up and take notice. The Government will be taken seriously in the international summits because the number of stakeholders in the country has increased.

The cons of foreign direct investment are most visible in cases where the industry could have national secrets. The defense sector could be at risk if it allows FDI. Foreign policies may be enforced that do not go down well with domestic employees.

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The advantages of the Foreign Direct Investments are that the majority victorious domestic companies, particularly those with only one of its kind compensation, spend abroad. The second advantage to be considered to be is the direct investment that makes companies more victorious internally. Companies with Foreign investment generally tend to be most profitable as well as it is to have a more stable sales and earnings.
The disadvantages of foreign direct investments are cost of travel and communications abroad. It also does not very much relate to local business tax laws, business atmosphere in particular and other government regulations. Another disadvantage could be the language and culture differences.

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