Assess the role of foreign capital investment in the development of your country.
Positive contribution
- It closes the saving-investment gap; the foreign capital into the country increases the national saving ability which finally leads to improvement in investment.
- It bridges the technological gap; foreign capital investment leads to transfer of technologies into the country.
- Development of skills; foreign capital investment impart new skills to the existing labour force
- Acceleration of growth of industrial sector and increased output.
- Development of infrastructure; foreign capital investment may necessity improvement in existing infrastructures such as road network, electricity distribution and education facilities to much the growing investment
- Production of wide variety of quality products
- Promotes efficiency of the local firm due competition and research accompanying foreign capital investment.
- Promotes international co-operation
- Fills manpower gap; foreign capital investment to a country in form of manpower solves the problem of inadequate manpower in the country.
- It is a source of revenue to the country through taxation
- Provides employment to local people through job creation
- Fills the foreign exchange gap through increasing the volume of exports
Negative contribution
- Accelerated capital outflow; increased government payments abroad and profit or income repatriation by foreign investors.
- Worsens external dependence; on foreign investors
- Local firms are out competed cause loss of employment
- It may be expensive to the government through subsidies to the investors.
- Leads to rural-urban migration because most investors prefer to invest in urban areas.
- Worsen income inequality because production resource are controlled by a few people.
- Cause regional imbalance when investment is concentrated in developed areas the provide market to the outputs.
CATEGORIES Economics
TAGS Dr. Bbosa Science