Countries all around the world are trying their best to develop with any possible way. It can be either the enhancement of technology, increment in the exports, foreign investments or the better infrastructural designs. Some of these are internal matters that countries need to focus for developing. But the investment from foreign companies is an external factor. It comes to any country when the internal matters are beneficial for the foreign company entering into the undeveloped or even a developed country.
The foreign direct investment provides many advantages:
1. It helps in providing local economies the benefit in multiple locations
The participants (companies or individuals) in FDI are able to stimulate community economic growth on the local level for their head offices. The profit earned is generally re invested into the employees or in increasing the organizational opportunities. It is helpful in creating more jobs, hence, creates new FDI openings.
2. The international trade becomes easy
The countries are now imposing tariffs that are a must to be paid for the goods and services. When the import and exports occur in any business, the business can strive to maintain the prices of the products available for the customers as the taxes are high. Limiting and eliminating these tariffs becomes comparatively easy when a minimum stake in a foreign organization already occurs. Therefore it allows the local business to get more control over the market while the prices are maintained in the pricing competition.
3. An increment in foreign income is possible
Several foreign markets are having employees working at wages which are considered poverty wages in United States, especially
Washington D.C. because majority of the earning people are paid $4 per hour. This amount is truly less; however, some markets even offer less than $1 per hour. When FDI takes place, foreign income rises. The wages of the workers increase. It is another way or resource to let the communities grow faster.
4. Your money can work for you
Tax incentives are applied by many governments to encourage Foreign Direct Investment. It allows more money to be able and available for foreign workers and companies so that they can work without any trouble of budget. These incentives make the goals easy to accomplish by the direct involvement of the money towards the resources rather than the government.
5. Improvement in human resource is achievable
Expertise of humans has made the businesses enhance to the level they are standing currently. The under-developed and developing countries have human skills but are limited to fundamental labor tasks. Which includes; agricultural work, labor, and other entry level skills. Foreign Direct Investment brings educational opportunities for the people who will to enhance their personal skills. Since, it is a fact that with expertise in the skill, higher wages can be earned. The levels of productivity reach the peak. It is, therefore, beneficial for both the company and the individual.
6. Brings new opportunities for workers
There is a chance for the employees of the investing company that they might travel to foreign countries. This will let them experience new cultures and various ideas. Once they get back, they will probably have enhanced or the innovative ideas for the home country. They get a better a access to the best practices applied by the developed countries. Thus, helps in creating and initiating new opportunities.
