What problems could result if a nation got all of its investment funds from foreign savers?

Expert Solution

Foreign direct investment supports the devloping country in many ways
1.It increses the existing capital level of the country.and increases the rate of economics growth.
2.It increses the inflow of foreign currency in domestic market and increses the reserve of foreign exchange.
3.With inflow of investments ,advanced technology also adopted in domestic market which increases productivity and profitability.
But apart from that there are some drawbacks in inflow of foreign investments.
1More dependence on foreign investors for investments.
2.At domestic level no much efforts will taken for investments.,it affected economics growth.
3.Advanced technology for production techniques are not available in domestic country., Foreign investors use natural resources from host country production and cost of production is very less but same products are sold by them in international market at very high prices.

Rahul Sunny answered 6 months ago

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