Foreign Direct Investment (FDI) refers to a private investment made by a resident of one country in an enterprise in another country. It is merely investment across borders. Foreign direct investment can be made in services, manufacturing, facilities and retail business, among other.
How developing countries attract Foreign Direct Investment (FDI)
FDI has been misunderstood in some developing countries to represent postcolonial exploitation by the developed states. This ideology is, however, not valid because FDI has played a significant role in uplifting the economies of developing nations.
The Online Publishers "TOP" Platform
To attract quality FDI, governments have signed contracts with the TOP platform to shed light on fruitful investment opportunities in their nations. TOP has partnered with bloggers, influencers, and journalists who are specialized in business and finance to gain the interest of foreign investors and entice them to invest in a specific country.
Developing countries should provide an open and transparent market to allow FDI to flow into their economy. Specific restrictions that have been put on FDI should also be reduced to enable ease of doing business, which brings foreign investments.
Encourage spill-overs into the economy from FDIs
The best way to attract quality FDI is by encouraging spill-over of knowledge and skills from multinationals to local firms. The knowledge of new and more advanced technologies and other marketing skills help the country’s economy to improve to match that of foreign investors.
People living in the diaspora can help attract quality FDI from their host countries to their home countries. These people have linkages to some domestic firms, and they can also invest as private investors in their mother countries.
The sectors to be targeted for foreign direct investments should be chosen very carefully. The location and nature of these sectors can influence the decisions of multinational investors in a significant way. Business journalism can help determine the current events of the domestic economy. This helps influence the decisions of the host country regarding the target sectors for foreign investors.
Before foreign investors decide to invest in a particular economy, they have to research the infrastructure, the social amenities, and the growth rate of that specific economy. As such, it is vital to ensure that the transport facilities are favorable for these investors. The supply of energy should be reliable, and there should be an adequate and skilled workforce.
Have an Investment Promotion Agency (IPA)
Targeting foreign investors is very easy when the country has a functional IPA. The Investment Promotion Agency acts as a link between the domestic and the foreign economy. The IPA also engages in after-investment care and acts as a catalyst in the local economy, which stimulates the domestic economy to grow by the provision of better infrastructure.
Focusing on quality foreign direct investments is an excellent way of ensuring progress in developing states. The inward FDI does not have to be of a very sophisticated technical level. As long as it links well with the economy of the host country, then it can benefit the domestic economy very well.