Foreign Direct Investment (FDI) is the investment of funds by a company from one country to another. There are many ways in which FDI benefits the recipient nation:
- Employment and Economic Growth – Development of work is the most apparent benefit of FDI. It is also one of the key reasons why a country, in particular a developing country, is trying to attract FDIs. Increased FDI enhances both the development industry and the services sector. In exchange, this increases opportunities and tends to lower the unemployment of trained young people in the world – and professional and unqualified workers.
- Human Resource Development – This is one of FDI’s less evident benefits. It’s always understated, but very important. The expertise and skill of workers is alluded to by human resources. Training and knowledge gained as well as improved skills, helps improve education and the country’s share of human resources.
- Finance & Technology – Recipient organizations have access from around the world to state-of-the-art financial instruments, innovations and operational activities. In the longer term, the adoption of modern, advanced technology and methods would extend to the local economy, resulting in improved industry productivity and efficiency.
- Exports Increase – Not all products made by FDI are intended for domestic use. Many have world markets for these goods. FDI investors have further helped to improve their exports from other countries by developing 100% export-driven units and economic zones.
- Capital Flow – Capital inflows are especially useful for countries with limited domestic resources and countries with limited chances of raising money on global capital markets.
- Competitive Market – FDI helps to build a dynamic atmosphere and crack domestic monopolies by encouraging the entrance of international organizations into the domestic market. A stable business climate encourages businesses to consistently develop their products and processes and thereby encourage creativity. Consumers now have access to a larger selection of goods at affordable prices.
FDI is an Indian multinational tool that enables it to reach and thereby grow its influence and business activities in the emerging consumption and development markets. It can obtain access to services not only small but also eligible and unsolicited, management and technology, such as fossil fuels and precious metals. FDI also allows a company, by leveraging inexpensive products and by moving straight to the raw materials source, to lower the manufacturing costs rather than by sourcing them from third parties. Also, a company’s FDI gains from different tax advantages. This will arise whether the nation of origin provides a tax exemption for international wages or if the beneficiary country offers exemptions and rewards for FDI organizations.