There is a constant debate between the good and bad aspects of FDI, which causes some hesitance for investors. But, when the pros outweigh the cons, most investors will find that the risk is worth it. Over the years, the number of countries who are participating in FDI has significantly increased and because this type of investment creates more of an opportunity for companies to explore the aspect of international business. Companies are finding that they are becoming more successful when they choose to expand their businesses into foreign land because of the increased opportunity.

Pros

• Allows for an exchange of useful skill sets and information
• Creates more job opportunities
•  Aggregate supply is shifted outward
•  Cost per unit will decrease, especially when the foreign company is in a less-developed country.
• GDP will increase

Cons

• Increased inflation
• Local job market negatively affected
• Foreign company becomes dependent upon investors for sustainability
• Heavy upfront costs

This entry was posted on Monday, November 28th, 2011 at 6:34 pm and is filed under Foreign Investment. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.