Question

Construct a table listing the potential effects of inward foreign direct investment on developing countries. In one column, list the possible benefits of FDI, in a second column, list the possible negative effects FDI can bring. Some of these effects may be political, others economic, social, or environmental. Briefly explain each potential benefit and each potential cost. Please explain clearly

Answer 1

Benefits of FDI	Cost of FDI
1. One o fthe biggest advantage of FDI is that it brings stimulation in the economy of the country and contributes towards the development of the country. It generates more emlployment and boost the economy.	1. FDI can have a negative impact on the domestic industries as it can be a hindrance for the domestic industry. The resources used are purchased from foreign industry and thus reduces the level of invetment.
2. FDI tends to develop the ability of human capital in the domestic country as the human capital gains experience from the traning provided to them.	2. The entry of foreign direct investment in the country will also lead to increase in level of pollution in the domestic country.
3. FDI may brings better technology in the domestic country and hence may impact the environment in a positive way.	3. FDP alo impact the soical life of the domestic labors. FDI can reduce the wages of the domestic small firms and thus reduces their standard of living.