Question

Discuss 2 benefits of Direct Foreign Investment. What are they and why are they important?

Answer 1

This provides multiple sites with the local economic benefits.
For their headquarters or home, the companies or individuals that engage in FDI will promote community economic growth at the local level. Sometimes, gains are reinvested into employees or expanded business resources, which can create new jobs and then create new opportunities for FDI. The investments always do the same for the international organisation's home market.

That enables the completion of international trade.
Most countries have tariffs on imports which are payable for goods and services. Because of those taxes, import / export companies can struggle to keep products at affordable prices for customers. Because a minimum stake in a foreign organization occurs, it becomes possible to limit or eliminate these tariffs via FDI. This gives more control over the market to local business, while maintaining price competition.

International sales can go up.
Most foreign markets have wage-earning workers who in the United States would be considered poverty wages. A majority of the world makes under $4 an hour. Many international markets are paying under $1 an hour. Foreign revenue levels can increase with FDI. Worker salaries are rising. That creates new resources which can help communities start to grow.

It's making human resources healthier.
Businesses are effective because people have know-how. Human skills in the underdeveloped and developing world are limited to basic labor, agricultural labour, and other skills at the entrance level. Foreign direct investment creates opportunities for education so that people can improve their personal base of skills. The higher wages can be gained with better skills. Bigger levels of productivity are achieved. Like the employee, the company benefits and that trickles down on every culture.