Over the past few years, there have been lots of concerns about whether foreign direct investments (FDI) are suitable for a country. While other people may view it as surrendering the power of a country, FDI doesn’t work that way. It’s even a blessing to a country’s economy, and it offers many other benefits. For people who may not know about foreign direct investments, these are investments made by entities in other countries other than their home countries. Many people confuse FDI with foreign portfolio investments, but these two are different.
In FDI, the investing party assumes direct control of the investment. On the other hand, foreign portfolio investments are made indirectly into another country’s economy by buying equities such as stocks and bonds. Who can be a foreign direct investor? They can be the following: An individual, a group of individuals, a company, a government body, a societal organization, or a combination of these.
The Importance of Foreign Direct Investments to a Country
Creation of more job opportunities
One problem that lots of countries have been experiencing, especially developing countries, is unemployment. Due to the rising population, governments and other bodies have not been able to create enough jobs for the people. FDI can come in as an excellent solution. When foreign investors build new facilities, they’ll provide employment to some of the local people. Even though foreign direct investments may not get rid of unemployment fully, they’re still an excellent solution towards eradicating this problem.
Another great advantage of FDI is that it leads to the target country’s economic growth. Whether the foreign investor is engaging in mergers and acquisitions, building new facilities, or re-investing profits from their home country, their main aim is generating profits. The best thing about all this is that it gives the host country a chance to also get money. For instance, they can get money through taxes imposed on these direct investors. These taxes can then be pumped into developing the country through ways such as building roads, hospitals, schools, and other amenities. And since some investors choose to build roads leading to their facilities and other amenities in the local area, these also lead to overall economic growth.
Access to skills and technology
When you allow foreign entities to invest in your country, you gain access to various skills and specialized technologies. Let’s face it, some developing and even developed countries are limited when it comes to various skillsets and technologies. By attracting foreign direct investments, you give the local people a chance to learn new expertise from these investors and develop themselves. And since some investors may come with innovative tech, it gives the host country an opportunity to take advantage of these technologies and learn easy ways of doing things.
These are not the only advantages of foreign direct investments; there many others that a country can take advantage of. To gain these benefits as a country, you should know how to attract FDI. This is where the TOP platform comes in to help. The Online Publishers TOP platform uses high-quality digital marketing tools and partners with professionals in business journalism to develop strategies that can attract FDI. With TOP, you can get the attention of foreign investors who will invest in your country.