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| Topic: |
Business
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| Number of pages / Number of words: |
11 / 3044 |
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Even though, FDI has good impact on host countries but the more open to FDI the more MNEs will hurt the domestic companies as they are not competitive in term of technology so gradually local companies will be losing their market and affect the domestic economy.
In some situations, MNCs exploit natural resources, cause environmental pollution, employ child labor, or take advantage of the looser regulations of the host countries (to bypass the stringent regulations and costly requirements of parent countries) (Kwok & Tadesse, 2006)...
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In this case, the increase of physical capital through FDI might have only transitory impacts on the economic growth of the host country. Indirectly, FDI can also be growth enhancing by encouraging the adoption of new varieties and equipment, and also of foreign technologies in the production function in the host economy (Kim and Seo, 2003)...
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