FDI constitutes both positive and negative impacts. FDI has certain positive impact on the host country’s economy through capital and technology transfer. These include:

Stimulation to domestic economy (through new ideas, products, technology, skills and capital)

Intensification of competition Negative impact of FDI include:

I. Over dependence of the host country on foreign technology


II. Threats to domestic industries

III. Distortions in wages/salaries structures

IV. Deter mental effects on culture, values and lifestyles

V. Political purpose and distortions.