Effects of Foreign Direct Investment (FDI) on Economic Growth Essay Sample

According to many principles investment had different connotations but in general, investment is the application of money for earning more money. Investment can be done anywhere in a physical asset or in any other tangible asset. Entrepreneurs invest the part of their earning in different endeavors to earn more.

As there are different types of investment depends on the sources of investment, it becomes difficult for a student to get comprehend the benefit of the particular type. As investment has its opportunity cost and the benefit in the future the students get confused to understand the references behind it.

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Foreign Direct Investment is the investment in equity or in physical assets in different countries. Therefore the overseas companies invest in a country on higher risk thus expecting a greater return. The different type of FDI affects the country in a different way. In can also increase the domestic investment as induced by the foreign market.

Students need to be careful in expressing the benefits of FDI in a country with due care of the country and market situation. We have the experts from the financial management who has good knowledge about the issues and they can provide you the sample essay or your own exclusive essay for you on this topic.

Essay Title- Impact of foreign direct investment on economic growth

For getting the benefits from FDI the country should create a healthy environment to enable the investment for the development of the country. The benefits of FDI are direct but do not happen automatically and its magnitude impacts economic development.

It also increases the country’s reputation in the global market. But a country has to create a conducive environment so the FDI can easily increase the performance of the economy. If an economy is facing the scarcity in the financial resources then FDI can supplement the countries resources.

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FDI is the free movement of the global wealth in one country however there is some investment cap in some particular sectors put by the country itself. The FDI can increase the efficiency in the utilization of the resources. There is also a net benefit associated with FDI with the direct benefit to the stakeholders and workers. Some invisible earnings of FDI are dividends, interest, and profits. It can create a balance in the balance of payments.

FDI is of two types like direct and portfolio investment so the impact of both types of investments has a different impact on the Singapore economy. By increasing the reputation in the international market, it also triggers the other foreign investments in the country.

FDI had also increased the Globalization of the business and gave the opportunity for the technology transfer from one country to another. It broadened the know-how of the business ways through licensing and patent rights. The FDI influences the management of the company to invest more in the domestic market as well as in the international market. For the development of the economy, it also triggers capital formation in the country.

FDI also increases the horizons of domestic firms through mergers and acquisitions. FDI also indirectly emphasize on the quality improvement of the product. With the macro growth perspective, FDI enhances the welfare in the country by creating more opportunities for work and thus income. With that, there are forward and backward linkages of the effect on the economy of the country as a whole.

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