Assess the role of foreign capital investment in the development of your country. 

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.
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