It is generally agreed that foreign direct investment is a good vehicle for the economic development of poor countries and it should replace foreign debt. This suggestion appeals to many countries mainly because to borrow has become very challenging and it will likely lead to accumulation of debt. As an option for development finance, it is likely to place a burden on the budget of the economy. Your country is thinking of making a policy shift from borrowing to reliance on FDI. However, you realize that many people, especially in government, are not very supportive of this idea and they are not sure how it can work. You have been approached and appointed as a consultant to help the government achieve this policy shift. Your brief is to develop a concept paper that will focus on the following: a) Provide a discussion of the benefits and problems associated with FDI inflows into the country. b) The challenges the country has faced in trying to attract more foreign direct investments and why. c) Recommendations on what the country should do to attract adequate inflows of FDI.
It is generally agreed that foreign direct investment is a good vehicle for the economic development of poor countries and it should replace foreign debt. This suggestion appeals to many countries mainly because to borrow has become very challenging and it will likely lead to accumulation of debt. As an option for development finance, it is likely to place a burden on the budget of the economy. Your country is thinking of making a policy shift from borrowing to reliance on FDI. However, you realize that many people, especially in government, are not very supportive of this idea and they are not sure how it can work. You have been approached and appointed as a consultant to help the government achieve this policy shift. Your brief is to develop a concept paper that will focus on the following: a) Provide a discussion of the benefits and problems associated with FDI inflows into the country. b) The challenges the country has faced in trying to attract more foreign direct investments and why. c) Recommendations on what the country should do to attract adequate inflows of FDI.
Chapter1: Making Economics Decisions
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Transcribed Image Text:It is generally agreed that foreign direct investment is a good vehicle for the economic
development of poor countries and it should replace foreign debt. This suggestion appeals to
many countries mainly because to borrow has become very challenging and it will likely lead to
accumulation of debt. As an option for development finance, it is likely to place a burden on the
budget of the economy. Your country is thinking of making a policy shift from borrowing to
reliance on FDI. However, you realize that many people, especially in government, are not very
supportive of this idea and they are not sure how it can work.
You have been approached and appointed as a consultant to help the government achieve this
policy shift. Your brief is to develop a concept paper that will focus on the following:
a) Provide a discussion of the benefits and problems associated with FDI inflows into the
country.
b) The challenges the country has faced in trying to attract more foreign direct investments and
why.
c) Recommendations on what the country should do to attract adequate inflows of FDI.
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