Developing countries benefit from international investment when conditions are balanced and favorable. This is true for both foreign and domestic capital flows. It is important for developing countries to develop a solid base of strength to bargain with foreign investors. FDI is a major source of foreign investment, but it is not the only source.
The goal of FDI is to help developing countries develop domestic productive capacity, create jobs, and advance economic development. But some critics argue that this type of foreign investment can harm a developing country’s economy. These critics argue that the capital will leave the host country and flow to the investor’s country, disrupting the local industry and economy.
Foreign investment also benefits developing countries by exposing them to global best practices. The multinationals that come to developing countries are world-class companies, and they bring their best practices to the sectors they choose. These practices benefit developing countries, including the local businesses that cater to the employees. Furthermore, these companies often create jobs in developing countries.
The most prominent investors are China, South Korea, and the Gulf States. However, there are other foreign investors who are also interested in developing countries. These countries include South America and Africa.