FDI is the investments that are made by a foreign entity or company in another country's company. Foreign direct investments are a win-win situation for both the investors and the company where the investments are made.
Also, high FDI is beneficial for the country where the investments are being done as it is seen as an indicator of growth. Many countries offer various incentives to foreign countries to make investments in their country.
There are also different ways in which FDI can be done such as the acquisition of the voting stocks in a company based abroad, company mergers, joint ventures with foreign organizations, and establishing a subsidiary of a domestic firm abroad.
Let us have a look at the various benefits of foreign direct investments.
High Employment and Developed Skillforce
• The workforce needs to be skilled so that they can provide world-class services. through foreign direct investments, there are also advancements made in making the workforce skilled by enhancing their knowledge.
• The competence level of the workforces gets increased with the new knowledge that is provided to the.
• Once the workforce gets skilled then they have the power to educate others as well in the road for developments.
• Through FDI many employment opportunities are generated for the country where the foreign investments are made.
Rural Areas Developments
• In the case of a developing country, it is the most important to make the rural areas developed and that can be done with foreign direct investments.
• This is a major advantage of FDI as it helps to transform the rural areas and upgrade the facilities that are present there.
• The economy of the rural areas gets a major boost through the employment opportunities that are generated due to foreign direct investments.
Technological Advancements
• Through foreign investments, many technological advancements come in the foreign country where the investments are made.
• The country where FDI is done gets access to various financial tools and technologies that they were never exposed to.
• It helps to become advanced in technology. The enhanced technologies are the biggest reason behind increased productivity and this can be shared with the foreign country through FDI.
High Exports
• Through FDI many products are manufactured not for domestic use as various products have high demands in global demands.
• The foreign investors get benefitted by the 100% export oriented units and economic zones that assist in boosting exports from different countries.