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Q.

What are the merits and demerits of Foreign Direct Investment?

Tags: foreign direct investment, news & events, politics & government
Asked by sisir majumder, 05 Oct '12 10:27 pm
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Answers (8)

1.

Merits:
- causes a flow of money into the economy which stimulates economic activity
- employment will increase
- long run aggregate supply will shift outwards
- aggregate demand will also shift outwards as investment is a component of aggregate demand
- it may give domestic producers an incentive to become more efficient
- the government of the country experiencing increasing levels of FDI will have a greater voice at international summits as their country will have more stakeholders in it
Demerits
- inflation may increase slightly
- domestic firms may suffer if they are relatively uncompetitive
- if there is a lot of FDI into one industry e.g. the automotive industry then a country can become too dependent on it and it may turn into a risk that is why countries like the Czech Republic are "seeking to attract high value-added services such as research and development (e.g.) biotechnology)"
Answered by saranathan Narasimhan, 06 Oct '12 03:32 pm

 
  
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2.

Every coins has two sides. as F.D.I. also
1. Money will be pour in our economy in very short time for Restructuring our infrastructure (like national highways, short linked between remote area. telephone line)
2. It creates great job in services sectors (unskilled labour will get jobs, under educated youth may engaged in marketing jobs and professional or job seeking course will start)
3. people will stop buying gold and investment purpose they may return to share markets , this increase the rise in capital .
4. Purchasing power will arise and the demand for goods and services may increase. and the economy may be driven by Demand Factor.
5. Qulatiy of product may rise to good.
DEMERITS.
1. Corruption may dry all this Money .
2. This is short Term Gain but may be Loss for Long Term economy.as profits may be drawn by the F.I.s
3. IT will disturbe our Soical Life. (*Money will get more Importance than MORAL Values, )
4. It will creates problem to our educational system ( ...more
Answered by apoorva jayant pathak, 05 Oct '12 11:34 pm

 
  
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3.

Merits are those that congress govt is briefing. demerits are explained by opposition parties. for common man no benefit will come to him.
Answered by Panneer Selvam, 05 Oct '12 10:35 pm

 
  
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4.

Certain sectors need to protected and you need make sure you get benefits out of it or they will start dectating your economy!
Answered by up front, 05 Oct '12 10:34 pm

 
  
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5.

Demerits are more
May be very brighten like how candle lit when it is going to end
Present reforms are just like that only
Answered by sigma, 05 Oct '12 10:31 pm

 
  
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6.

There are no Merits, all demerits which will be seen after four to five years when all THE profits shall be pumped to the country of origin of the fdinvestor :
Answered by Ganadhisha, 05 Oct '12 10:30 pm

 
  
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7.

FDI is like a double edged sword, it can cut eitherway. If it is in hands of right person, it benifits India otherwise we will goback to 1970s
Answered by MAdhavan Avadhany, 05 Oct '12 10:30 pm

 
  
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8.

May be starting on another EAST INDIA COMPANIES
Answered by rekha agarwal, 05 Oct '12 10:30 pm

 
  
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