Question

How do you evaluate the benefits or detriments of foreign investment? How much weight do you give to the concern that FPI can lead to economic upheaval? Do you find the argument that foreign investment amounts to “buying” another country? What controls could be put in place to counter this concern? What relationship do you see between FDI and employment? Looking at the United States as an example, have you noticed a shift in the distribution of jobs over the past decade? What jobs are leaving the United States? Where are these jobs going? What jobs are replacing them?

Answer 1

It is difficult to assess whether foreign investment is generally a positive issue in world affairs. Foreign investment has many benefits, but also many side effects. Most economists agree that foreign investment is driving rapid economic growth. With regard to developing countries in particular, it is impossible for a nation to increase its prosperity without opening up to foreign investment. Foreign investment can compensate for the lack of resources or capital in the country, add or replace trade, create millions of jobs, transfer technology and cause massive capital inflows. On the other hand, foreign investment also causes a lot of damage. FPI, in particular, have been shown to be highly volatile and can lead to financial crisis. Foreign investment also leads to economic problems and can lead to lower wages and labor standards.
I think the fear that FPI could lead to a real economic cataclysm. Foreign direct investment is highly volatile due to past financial crises, such as investment in Asia in 1997. Foreign direct investment often comes from small businesses or individuals and is liquid and easy to sell. FPI investors are often not in the country for a long time and do not consider the country in which they invest.
There is some truth to the claim that foreign investment is the acquisition of another country. An example is found in the case of developed countries investing in the natural resources of developing countries. In many cases, developed countries are clearly exploiting a small country, and it is likely that a developing country will achieve good results in the long run by conserving its resources. Also, foreign investors can benefit from prominent sectors of the national economy, companies, individuals and even historical sites that are important for national identity. The regulations that can be put in place may be regulations that define key parts of a national identity and exclude them from foreign investment restrictions or policies that require foreign investors to have a plan that benefits the nation. Long-term investment.
Foreign direct investment is estimated to create millions of jobs around the world and the global market is integrated. However, foreign direct investment has some negative effects on employment. Foreign investment is generally shown to be low-wage due to competition, which leads to overall job security and creates unfavorable conditions and standards for workers.
Especially in the United States, I have seen a decline in low-skilled jobs, such as factory work. Factory work leaves the United States for other countries that can produce goods for less cost. Jobs that require more advanced skills, such as technological jobs, are replacing traditional jobs with lower qualifications.