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In: Economics

What are the possible benefits from foreign investment, for both the source and host country?

What are the possible benefits from foreign investment, for both the source and host country?

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Expert Solution

Foreign direct investment (FDI) is an investment activity is done by one country into a business or corporation in another country with the intention of increasing business expansion and economic profitability. FDI increases the benefits for both Host and source countries in different way possible.

Benefits to Host country benefits to source country
  1. Economic stimulation and development
  2. Development of human capital formation
  3. Increase in employment and income opportunities
  4. Access to management expertise, skills, and technology of local economy.
  5. economic and social infrastructure
  1. Market diversification and expansion with existing and new product and services introduction.
  2. Tax incentives to host countries
  3. easy availability of labor and Lower labor costs
  4. Preferential tariffs for export and import of goods and services.
  5. Subsidies from local government to support the production process.
  6. diversification of business.

Rahul Sunny answered 3 years ago
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