WHAT ARE THE ADVANTAGES / BENEFITS OF FOREIGN DIRECT INVESTMENT IN A HOST COUNTRY ECONOMY?

Foreign direct investment is only a transfer of ownership from domestic to foreign residents but also a mechanism that makes it possible for foreign investors to exercise management and control over most countries firms. That is, it is a corporate governance mechanism. Nigeria has one of the highest rates of investment return in the emerging markets, presently estimated to be about 30 percent.

What are the advantages to the host countries economy? According to Feldstein (2000); 

First, international flow of capital reduces the risk faced by owners of capital by allowing to diversify their lending and investment. 

Second, the global integration of capital markets, contribute to the spared of best practices incorporate governance, accounting rules and legal traditions. 

Third, the global mobility of capital limits the ability of government to pursue bad polices. 

Four, FDI allows for the transfer of technology –particularly in the form of new varieties of capital inputs-that cannot be achieved through financial investment or trade n goods and services. FDI can also promote competition in the domestic input market. 

Five, recipient of FDI often gain employee training in the course of operating the new businesses, which contribute human development in the host country. 

Lastly, profits generated by FDI contribute to corporate tax revenues in the host countries.