Question

Identify and discuss three key benefits of inward FDI (i.e. FDI coming into a country from foreign sources) for the host country? In your discussions provide examples, such as from McDonald’s in Moscow. Your answer should include three citations.

Answer 1

1. Inward FDI :- The inward FDI stock is the merit of foreign investors equity in and net loans to company resident in the reporting economy. FDI stocks are calculated in USD and as a share of GDP. FDI generates stable and long-lasting links between economics.

2. Key benefits of inward FDI to home country:-

a) It lower transport costs.

b) It helps to improved technology which has helped increase low capital intensive startups.

c) It helps to increased global trade and also decreases the tariff costs.

d) It creates job opportunities.

e) Development of Backward Areas.

f) Improved Capital Flow.

g) Creation of a competitive market.

Example:- McDonald's Corporation is an American Fast Company, who opens its restaurent in Moscow. It is an example of FDI Moscow, as a host country will get these three benefits,

i. Job opportunities for local people.

ii. Economic Stimulation.

iii. Development of Human Capital.