There were covered many positive aspects of FDI for host countries: 1) poverty reduction;

2) infrastructure development; 3) providing employment, 4) stimulating economic growth;

5) increase in tax payments for host countries; 6) increase in exporting; 7) more female
involvement in working; 8) higher wages paid by foreign companies; 9) technology
spillovers; 10) the best kind of investment for host country; 11) increase in competition.

One of the strongest argument was better economic growth, supporting it they mentioned
World Bank statistics, which said that by 2001 developing countries received more than
755 million dollars of private investment. Increase in export is a part of economic growth,
which was supported with an evidence that 2,5$ of FDI resulted in 1$ of exports in
Vietnam, which were 55% of all export (Xuan and Xing, 2008). Providing the employment
was probably second best argument, which was endorsed by statistics that FDI created 73
million jobs worldwide by 2006 (United Nations Conference on Trade and Development,
2007). They could also include Chinese example, which shows that unemployment fell from
10.1% to 4.1% for the last decade. Third best argument was about technology spillovers. It
involved many aspects such as direct technology exporting to host country, educating
employees and that it would encourage local companies to invest in technology to stay
compatible with foreign companies. This argument was supported by example of rapid
success of China.

Another good argument was consideration that increased competition caused by FDI
would increase efficiency for domestic companies. This would result in several benefits for
consumers, which were not covered by debate team like more affordable cost and better
quality of products. Increase in tax payments is undefeatable point, which was supported
with data saying that Vietnam received a quarter of its tax income from foreign firms.

One of participants stated that foreign companies pay higher wages comparing to domestic
companies, however it is not completely true as unskilled workers earn same as in other
companies (Hale and Long, 2008), therefore this argument might be not appropriate.

There was raised a big issue concerning that FDI is more beneficial comparing equity and
short-term debts. Particularly it pointed that FDI is ”good cholesterol” as it cannot leave in
a short period of time while a sign of trouble (Hausmann and Fernandez-Arias, 2000).
There is in argument related to this topic, which also has not been covered, is that FDI
raising the level of investment, “as government can fill the gap between desired investment
and locally mobilised savings“ (Prakash, 2010)

Rest two arguments were poverty reduction and female participation, whereas last issue
has not been covered with statistical data. Poverty reduction has been supported with
statistics from Vietnam, which showed poverty fell from 58% in 1987 to less than 29% in
2002 (Hung, 2004).

References:

Xuan N. T. and Xing Y., 2008. Foreign direct investment and exports. The experience of
Vietnam. Journal: Economics of Transition Vol. 16(2), pp. 183-197

United Nations Conference on Trade and Development, 2007. World Investment Report.
Published in Switzerland
Hale G. and Long C., 2008. Did Foreign Direct Investment Put an Upward Pressure on
Wages in China? Working Papers Series of Federal Reserve Bank of San Francisco

Hausmann R., and Fernandez-Arias E., 2000. Foreign Direct Investment: Good Cholesterol?

IADB, Research Department Working Paper No. 417.
Prakash P., 2010. Chapter 4: Advantages and Disadvantages of FDI for the Host Country.
Essay paper from Vivek College of Commerce

Hung T. T. 2004, Impacts of Foreign Direct Investment on Poverty Reduction in Vietnam.

Published in National Institute for Policy Studies