international business environment 1

4.Drawing from the experience of not more than 2 countries and on relevant theories, critically analyse extent to which developed and developing host countries benefit from FDI, and who the beneficiaries are.

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-Definition of FDI

Benefits of FDI

Positive impact of FDI :

ØOn economic growth (GDP), well bing

ØOn employment

ØOn balance payment (current account as well as capital account, reserves)

ØOn technology transfer (hard and soft technology)


ØContribution to taxes

Theoretical argument

Direct impact theory

New growth theory

– Negative impact of FDI :

ØOn balance of payment

ØOn externalities – pollution, emergence of monopolies

ØSurvival of local firms

ØThreatening developing governments