Foreign direct investment (FDI) is an investment made by an individual or company from one country in another country. This investment can take place in various forms such as the acquisition of a company or facility, joint ventures with local businesses, or setting up new operations in the foreign country. FDI is done with the aim of establishing a lasting interest and control by a foreign entity in the economy of the host country. The main objective of FDI is to increase the foreign investor’s profitability through gaining ownership and control over an asset in a foreign country and to provide additional capital to the host country’s economy. FDI can bring various benefits to the host country such as job creation, increased tax revenue, and technology transfer. However, it can also have negative impacts such as the exploitation of natural resources and the loss of control over key economic sectors.

Positive aspects of foreign direct investment (FDI):

1. Job creation: FDI can create new jobs in the host country, which can help reduce unemployment and promote economic growth. More opportunities create more jobs worldwide.
2. Technology transfer: Foreign companies often bring new technologies and skills which can help the host country improve its competitiveness and productivity. New technology brings new hope and more productivity to the system.
3. Investment inflows: FDI can bring in additional funding to the host country, which can stimulate economic growth and development. Sustainable business needs more money to explore new avenues and invest more in relevant sector.
4. Infrastructure development: Foreign companies often invest in infrastructure like roads, ports, and power plants, which can be beneficial for the host country in the long run. Its only possible to develop infra through FDI INFLOW.
5. Global integration: FDI can promote global integration and economic interdependence among countries, which can facilitate trade and investment.

Negative aspects of foreign direct investment (FDI):

1. Exploitation of resources: Foreign companies may exploit natural resources in the host country, leading to environmental degradation and negative impacts on local communities. Sometimes natural resources are not properly used by the foreign countries as well as destroy host country environment as well.
2. Loss of control: FDI can lead to the loss of control over key economic sectors and assets of the host country. Sometimes host countries have less control over foreign investor leads more chaos in the business.
3. Profit repatriation: Foreign investors may repatriate profits back to their home country, leading to a reduction in the host country’s money supply.

4. Dependency: Overreliance on foreign investment can lead to economic dependency on foreign entities and the vulnerability of the host country’s economic and political sovereignty.
5. Labor exploitation: Foreign companies may exploit local workers by paying low wages and providing poor working conditions.