Is FDI (foreign direct investment) beneficial for a country in achieving economic

development. Justify your answer.

FDI is when a company or an investor buys a stake in a company or business in a foreign nation.
FDI can be of different forms like capital investment, allocation of resources, nee technology,
machinery etc. In horizontal FDI, a company sets up a similar business in a foreign country as it
does in its home country. In vertical FDI, a company buys a similar business in a foreign nation.
Government allows FDI as it brings in new capital in the economy, creates new business and
employment opportunities. Nations give various tax incentives and subsidies to foreign
businesses to ensure they invest in their country. It causes a transfer of knowledge, physical and
human capital between nations. Some technologies are difficult to innovate and sometimes it's
easier to buy them from the nations which have already established technology.