Disadvantages of Fdi Essay

Disadvantages of Foreign Direct Investment The disadvantages of external direct investment funds conk mostly in case of matters related to operation, distribution of the profits made on the investment and the personnel. unrivalled of the most indirect disadvantages of foreign direct investment is that the economically backward section of the host soil is always inconvenienced when the stream of foreign direct investment is negatively affected. The situations in countries like Ireland, Singapore, Chile and china corroborate such an opinion.It is normally the responsibility of the host artless to limit the extent of impact that may be made by the foreign direct investment. They should be fashioning sure that the entities that are making the foreign direct investment in their countrified adhere to the environmental, governance and social regulations that have been set down in the country. The versatile disadvantages of foreign direct investment are understood where the host c ountry has some sort of national secret something that is not meant to be disclosed to the rest of the world.It has been observed that the defence force of a country has faced risks as a result of the foreign direct investment in the country. At propagation it has been observed that certain foreign policies are adopted that are not comprehended by the workers of the recipient country. Foreign direct investment, at times, is also disadvantageous for the ones who are making the investment themselves. Foreign direct investment may entail high travel and communications expenses.The differences of language and floriculture that exist between the country of the investor and the host country could also pose problems in case of foreign direct investment. Yet another major disadvantage of foreign direct investment is that there is a chance that a company may lose out on its ownership to an overseas company. This has oftentimes caused many companies to approach foreign direct investment with a certain amount of caution. At times it has been observed that there is considerable instability in a particular geographical region.This causes a business deal of inconvenience to the investor. The size of the market, as well as, the condition of the host country could be important factors in the case of the foreign direct investment. In case the host country is not well affiliated with their more advanced neighbors, it poses a lot of challenge for the investors. At times it has been observed that the governments of the host country are facing problems with foreign direct investment. It has less control over the cognitive operation of the company that is functioning as the wholly owned subsidiary of an overseas company.This leads to serious issues. The investor does not have to be all in all obedient to the economic policies of the country where they have invested the money. At times there have been adverse make of foreign direct investment on the balance of payments of a country. Even in view of the various disadvantages of foreign direct investment it may be said that foreign direct investment has compete an important role in shaping the economic fortunes of a number of countries around the world.