Briefly explain how a poor country might benefit from foreign portfolio investment or foreign direct investment.

1 answer:

3 0

A poor country might benefit from foreign portfolio investment or foreign direct investment as they will get new varieties of capital inputs through FDI, it will also benefit by getting human capital development, and more and more profit will be generated through taxes.

Foreign direct investment allows the transfer of technology in the form of new varieties of capital inputs, FDI also promotes a higher level of competition in the domestic market of inputs.

Recipients of FDI or we can say the poor country generally gain employee training in the course of operating the new businesses, which leads to a human capital development in the host country.

Profits are also generated by the FDI always contribute to corporate tax revenues in the host country or the poor country.

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