What is the connection between direct foreign investment and economic growth?
The connection between direct investments of foreign and economic growth is based on the benefits that are increasing on the basis of investment by foreign companies. The interconnection analysis between direct foreign investment and economic growth can be addressed due to the relationship from physical or infrastructure benefits. It can also be studied from the angle of the influx of technology and the influx of human capital in relation to the benefits for the economy.
The direct connection between direct foreign investments and economic growth is the benefits of such investments to develop the host or local country infrastructure. This type of economic benefit is the best known in less developed countries than in more industrial countries. An example of this connection between direct foreign investment and economic growth can be seen in an oil company from an industrial nation that invests directly in a less developed country with abundance oil. The investment could be in the form of construction of sophisticated refineries that would hostThe Elk's country probably couldn't do it in itself. If the refineries are fully functional, they will serve as a means of extraction and packed oil for sale on the international market as well as a source of income for the host country.
Further link between direct investments of foreign and economic growth is derived from the benefits that the host country comes from incoming technology. When companies invest in the local economy, they can present technology that is more advanced than what it gets in the host country. Such excellent technology can indeed be part of the business strategy of investors who can choose a country with a shortage in technology they have as part of the minimization of competition. If this is the case, the host country can use technology for its own economic contribution.
aspect of foreign investments is human capital that comes with such an investment. If spolThe scouts are investing in the international markets, part of the business strategy to obtain excellent human capital to help establish a subsidiary. For example, if the company decides to open a branch in another country, it will look for some of its best employees with proven place management records. It will also employ the most repairous employees with the best human capital for working in a new branch. Such an influx of human capital is also economically beneficial for the host country, as local employees can improve their human capital, which will continue to serve as an advantage to the country, even if the company stops operation in the local country.