Foreign Direct Investment ( Fdi ) Essay

767 Words Nov 19th, 2015 4 Pages
Foreign direct investment (FDI) is a controlling ownership in a business enterprise in one country by an entity based in another country. FDI is a major source of capital for many developing countries such as Russia and Zambia. It is usually difficult for these countries to solely rely on their own domestic strengths and capacities alone and therefore FDI is considered necessary for these countries as it contributes to their general economic growth. However FDI can have a huge positive and negative implication to which I will elaborate on in this essay.
Furthermore FDI in Russia and Zambia could have the potential to eliminate there high unemployment rates. In Russia the unemployment rate in 2015 was recorded at 5.3 percent in August of 2015, the same as in July, remaining one of the lowest in Europe. One of the reasons why policy makers in developing countries strive to attract FDI is to create new jobs in their economies. Zambia also has a high unemployment rate of 13.30%. If these developing countries sought to seek FDI then workers would be required and most firms would rely on the recipient country of FDI for workers rather than employ workers from the host country. Therefore FDI could potentially decrease the unemployment rates of these countries. Foreign direct investment not only creates new jobs as investors build new companies in the target country but it also creates new opportunities. This leads to an increase in income and more buying power to the people, which…

Related Documents