International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss


The Contribution of Foreign Direct Investment into Home Country’s Development
Mohammad Reza Nourbakhshian, SepehrHosseini, Ali Haj Aghapour, Reza Gheshmi

Global foreign direct investment (FDI) trends are likely to modify during the period 2004-2007. FDI has promoted to effective economic growth in a number of developing countries and the role of the foreign direct investment in this field has been extensively known in China and India, the world‘s two most populous growing economics have been using FDI as a stimulus in the growth process. For several decades FDI and economic growth have relationship which it has been a topical issue in policy market. Policymarkers in a large number of countries are engaged in creating all kind of incentives (e.g. export processing zones and tax incentives) to attract FDI, because it is proposed to affect local economic development positively. Many countries have regarded FDI increasingly as contributing to their development strategies for the technology and capital it applies, and therefore have made to compete for FDI. Policies about investment have become liberal at the national and regional level, but scientists still do not find the comprehensive framework for FDI at multinational level. Home countries are hoping to push FDI into developing countries using guarantee funds and match marketing. There is optimistic view about the medium prospects for FDI that are explained in number of reasons. Broadly speaking, FDI has positively impact on economic growth, domestic market and international trade. These consider as the ongoing global trend towards the better business environment, and the search for competitively priced skills; and sharper global competition pushing companies to find lower cost destination. Generally, most host and home governments will tend to go on encouraging FDI.

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