Benifits of Host Country

Host Country:

Countries which attract foreign direct investment. Most governments are keen to be in this position because the investment creates jobs and income and may bring useful technology transfer. Foreign companies often provide training for employees. In the UK, Wales has been particularly successful as a host country and the employment generated has helped to fill the gap left by declining industries.

For developing countries, foreign investment has particular pros and cons.

•    The investor may help to increase exports, bringing in much-needed foreign exchange. However, the profits will be repatriated to the parent company or its shareholders in developed countries, creating an invisible outflow in the balance of payments.

•    Technology transfer may or may not happen. If it does, it will help to create a pool of new skills which will benefit the host country economy. But some multinationals set up in developing countries simply to take advantage of the cheap labour available, give little training and move on to other locations if wage rates rise.

02/12/2020

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