The Secretary General of world organization

The Secretary General of world organization (Koffi A Annan) summarized the importance of FDI to the developing economies as follows ?with the large potential to make jobs, raise productivity enhance exports and transfer technology, foreign direct investment could be a very important think about the long-run economic development of the event of the developing countries? (United Nations, 2008 page iii).Despite the advantages that may be delivered from FDI, it ought to be noted that it also can cause some negatives impact. for example activities of MNEs will displace native corporations that can’t deal with the competition from foreign corporations, thereby reducing the expansion of the native corporations. (Jones, 2005). additionally if correct regulation isn’t in situ within the host country, FDI will function a supply of capital flight from the developing countries to the developed ones. for example because of some specific risks within the host country (economic and political risks), there may well be giant flow of capital from the host country to the house country if there’s no legislation against such apply. this will have adverse result on the host economy particularly if such capital is sourced for among the host country. Finally because of MNEs higher production capability, FDI will cause giant scale environmental harm that generally isn’t well taken care of particularly within the mining sector (Bora 2002).

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