FOREIGN INVESTMENT

Foreign investment is the inflow of capital from abroad in the form of private investment. These can be in the form of Foreign Direct Investment (FDI) and Portfolio Investment. Foreign investment is one of the most important sources of finance in the development of any economy.

As per the UNCTAD World Investment Report (WIR) 2013, India is regarded as the third most attractive location for FDI for 2013-15. Not only this, but various other research works have proved it that India is one the most preferred location for FDI inflows. The reason for such conclusion is dependent on certain factors, which include the vastness and growth prospects of the Indian market, Cost-effective and highly skilled labour, and vast amount of natural resources and so on and so forth.

Foreign investments are always welcome. They are of utmost desirability and there are various benefits of foreign investment in any economy. Some of the benefits can be listed out as follows-

• Foreign investment in any economy benefits it by providing technical knowledge in the host country. When FDI inflows happen, with it, not only the finances but also the technically superior knowledge is made available to the host country.
• Foreign investment in any country brings in capital. The inflow of capital raises the level of investment activity in the host country.
• Due to the raised level of investment activity in the host country, various employment opportunities are made available. Not only the skilled and proficient workforce but also the unskilled and manual labour.
• One of the greatest advantages of foreign investment inflow in a country is that it helps in bridging the gap between different nations. There are certain countries which are rich in resources and have a highly developed economy, while some lag behind in development. The foreign investment inflow helps in bridging this inequality gap.

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