Question 32. What is the role of FDI in the growth of a country's economy ?
Answer 32 . ROLE OF FDI :
1. It acts as a significant driver of development in poor nation.
2. It increases the transfer of skills , technology and job opportunities.
3. It helps the developing countries to have transparent and effective policy environment , for investment which helps in human resources as well as infrastructure development.
4. It helps in increasing the rate of employment as various industries would be set up due to FDI inflows , which in turn will enhance quality and standard of living.
5. It helps in technological advancement and outsourcing of knowledge , which helps in improving performance and quality of service of the human resources.
6. Foreign firms going for joining ventures generally spent the major profit within the domestic market.
7. Increases financial resources of a country , which helps in the development of the country.
8. It gives a sense of healthy competition , which boosts the export and other product quality and thus , giving the domestic firms a competitive edge internationally.
9. Interaction with the developed countries helps the domestic country to learn from the past experience and thus , they can avoid mistakes and problem already faced by developed nations.
10. Some products need certain raw materials which are available in specific country only, which increases the cost of transportation . Thus , developing that product in that particular country would help in reducing the overall cost of production.