What Is FDI? And It’s Benefits.

Foreign Direct Investment

Foreign Direct Investment (FDI) is an investment of capital/ fund from an individual or an organization
from one country to another. Generally, FDI takes place when an investor establishes foreign business operations or acquires foreign business assets in a foreign company.
Well in this topic we have covered “What Is FDI? And It’s Benefits”, now we know what is FDI,
let’s understand the benefits of FDI.

Benefits of Foreign Direct Investment:


  • Increased Employment and Economic Growth
  • Development of Backward Areas
  • Provision of Finance & Technology
  • Increase in Exports
  • Exchange Rate Stability
  • Stimulation of Economic Development
  • Creation of a Competitive Market


  • Increased Employment and Economic Growth:

    As the foreign investment or any of the investment is invested in starting an idea or business
    is not only creates employment opportunities but also provides a boost to the growth of the economy.

  • Development of Backward Areas:

    As the investment increases the growth of the economy, which will not only lead to an increase in the job
    opportunities, but also will lead to a drastically improve the standard of living of a human being.

  • Provision of Finance & Technology:

    The FDI not only brings funds but also provides aids like new and improved technology,
    which will help the country to enhance their productivity and sustain in the market.

  • Increase in Exports:

    FDI stands for Foreign Direct Investment, which means investment from one country to another,
    for the sake of trade or improve the relation, which will lead to sharing the resources,
    for the sake of human betterment.

  • Exchange Rate Stability:

    By investing in a different country there is a fluctuation in the rate of currency,
    which will lead to the enhancement of the country’s value in the global market.
    in otherwords, that will enhance the country to increase the forex transactions.

  • Stimulation of Economic Development:

    This is one of the important sources of  FDI, Foreign Direct Investment brings
    is an External Source of Income for the receiving country.
    When Foreign companies start their business they aim to create a workplace,
    so they hire labor, Equipment, and all the necessary material.
    once the company is created, the company hires local employees and uses local materials.
    this in return not only generates jobs but also additional benefits for tax revenue.

  • Creation of a Competitive Market:

    Providing opportunities to the foreign investors they create a marketplace for their products,
    which will be a break of monopoly market and creates competition between sellers,
    however, it will increase the production and also increase the sales and the highest benefits,
    is received by the customer, because they will have the opportunities to choose.


In summary, of the topic “What Is FDI? And It’s Benefits”, in essence we can understand,
that foreign investment is wholelly a growth over all to the country and it economic state,
but however, it has certain fails as well, for ex: pressure on the local vendures etc.

[ Read More: Is This the Right Time to Invest in Mutual Funds? ]

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