Foreign Direct Investment And Developing Countries

1442 Words Nov 29th, 2016 6 Pages
Foreign direct investment plays a critical role in financing the development of emerging economies. Foreign direct investment benefits countries through a transfer of resources in the form of capital, technology, management of resources, creation of work opportunities, and a positive impact on the country’s balance sheet, typically through an increase in export volumes. These benefits are essential for sustainable growth and development of a country, especially for developing countries. Despite the important role that foreign direct investment plays in helping to achieve the Sustainable Development Goals, many developing countries face challenges in accessing this source.

Many countries that do have access to foreign direct investment are only given access in specific areas of business or of the country. Other countries, often those that needs it most, are overlooked by investors, missing out on this source of finance entirely. In Indonesia, eighty percent of foreign direct investment are confined to Java where the country’s capital is. Geographically focused approach of foreign direct investment prevents investors from capturing the full opportunity offered by developing countries. Resources need to be allocated to match the shifting distribution of each country’s growth. Understanding the priorities of central and local governments as well as determining how or where these align with business priorities is a tremendous challenge.

The President of Indonesia, Joko Widodo,…
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