Question

‘Foreign direct investment in so called ‘dirty industries’ can generate the economic development that provides the wealth that allows for later improvements in environmental standards’. Discuss this proposition in relation to one or more of the newly industrialising countries using relevant data to back up your argument.

Answer 1

A survey by World Bank group shows that FDI’s are good for the economies especially the developing economies. Foreign Direct Investments enable the inflow of technologies and human capital along with the skills. This creates growth in the economy. Countries generally do Foreign Direct Investments and accept it also (Both ways).

Even in dirty industries, Foreign Direct Investments can generate the economic development that provides the wealth that allows for later improvements in environmental standards. Countries have a regulatory policies regarding environment and thus before investing somewhere like this, proper checking needs to be done by the investors. Such areas might offer greater interests in order to have ore investors in hand. It can be effective or ineffective depending on the nature of the Foreign Direct Investments. FDI promotes growth in recipient countries. It promotes the business that means greater access to the market and environment which actually means greater profits and thus growth. From a little time back, India being one of the newly industrialized economy have become a great economy today. It’s still developing but the Foreign Direct Investments that came in the country have promoted its growth to a great extent.