What is the Impacts of FDI on Country’s Economy

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.