Fdi and Its Impact on Host Country

Tags: Export, Foreign direct investment, Crowding out (economics)

workforce which is of course a benefit for the host countries’ economy as it increases skilled labours in the labour market. In addition, they also inspire other local firms to use new technologies and learn new ways of operating organizations. There is better utilization of resources including the human resource which is indeed beneficial to both the MNCs and the host countries.

Balance of payment
Transaction between one specific country and all other countries in a specified time period is balance of payment. It compares the cash inflow and cash outflow. For a healthy economy there should be balance in cash inflow and outflow. FDI has a vital role in maintaining balance of payment. With the introduction of FDI there is increase in the production and export for a host country. And increasing export increases cash inflow to the host country. Again when host country makes payment to other country or imports goods, there is cash outflow. So this whole process makes balance of payment. Balance of payment is one factor that helps develop the economy of a country and FDI has helped maintain the balance of payments of these countries due to the above mentioned activities.

Multinational enterprises are huge in nature. They need huge workforce to carry out their operations. When an MNC operates in a host country, it provides employment opportunities to many people. Along with employment they provide, good salary and other benefits and allowances. As a result, there is an increase in employment rate, per capita income as well as the standard of living of people improves in that particular country. Indeed, MNCs are a good source of income and employment for the host countries. It is only through the engagement of people in income generation activities that the economy of a country can boost and the financial sector can improve. Coca Cola, KFC, Dabur, Hyatt Regency and Pizza Hut are some of the MNCs operating in Nepal that have been employing huge...
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