Sierra Mae S.

Fiedalino International Political Economy

AB Foreign Service Sir. Jumel G. Estrañero

The Role of Foreign Direct Investment in Economic Growth

Foreign Direct Investment is an investment in a business by an investor from another country for
which the foreign investor has control over the company purchased. If less than 10 percent of the
investment of a foreign investor it doesn’t give a controlling interest rather they can only influence
in the decision making for the company.
Foreign Direct Investment is not helpful in the country’s economic only but also globally. Both
host and receiving state are has a benefits on it. Foreign direct Investments can stimulate the
economic development in the country, which is very important for a state to have a stable
economic. It also creates new jobs and opportunities for our aspirants workers specially in the
Philippines for it lacks of job offerings for our workers and this can lead to an increase income
which will be the reason for the economic to boost. Human capital resources is one of the
advantages of foreign direct investment, for it brought a new knowledge to be able to perform
labor or we known as workforce. The attributes gained by training and sharing experience would
increase the education and overall human capital of a country. Also it can also help the state’s
workforce by being provided the facilities and equipment by the foreign investor. Another helpful
benefit of a Foreign direct investment is the increase income in the state, with more jobs and higher
wages, the national income normally increases and other companies also offer higher salary levels,
which can lead to increment in income of the state.
If there are Pros , there are Cons. Foreign direct investments can hinder domestic investment
because of the resources that are from the investor’s home country. Politics issue can instantly
change, It is hard to take a risk to invest in this kind of monumental situation. It can also have a
negative influence on exchange rates for the foreign direct investments can affect the exchange
rates favor to another country. One factor also is the higher cost, if you invest in some foreign
countries, you must prepare sufficient money for your investments. Political changes can also lead
to expropriation, which you have to voluntarily give your properties when government needs it. In
terms of Economics, China is the best to engage in economic cooperation because China was the
world's fastest-growing major economy, Also China is the world's largest manufacturing economy
and exporter of goods. Which might help to strengthen our labor force. China is also the world's
fastest-growing consumer market and second-largest importer of goods and China is a net
importer of services products. China is the largest trading nation in the world and plays a prominent
role in international trade and has increasingly engaged in trade organizations and treaties in recent
years. That might help Philippines in terms of economic development. A lot of China’s successful
in the field if economics that will surely a big help for the Philippines who still aiming to be a
developed country.
The Philippines still lags behind Southeast Asian Neighbors in attracting foreign direct
investments, Also attracting job-generating foreign direct investment remains challenge,
According to the United Nations Conference on Trade and Development (UNCTAD), investment
flow in the Philippines increased for the past few years but the country is still lagging compared
to its neighboring countries. Labor productivity in the Philippines still lagged and much of it is in
manufacturing. One of the major problems of the economy is the jobs creation which can reduce
poverty. Globalization has a big part in the Foreign direct investments for it has strong support in
the developed and developing countries, as well as throughout the economics profession.
In Globalization does include the expansion of international trade, financial flows with FDI as the
most important component of these flows. In different transactions that are generated by different
country conditions and opportunities, and have different impacts on the host country. Thus a
detailed look at the components of FDI flows will be required when focusing on specific regions
and countries. Also it depends to Globalization the outcome of Foreign direct investment.
Aw we all know are still lacking to attract Foreign direct investment so to improve it, I have these
recommendation that might help. First is to promote rapid, sustained growth, the government is
anchoring public investment to areas and programs that will improve the investment climate for
private investors. Second fix the government’s strategic framework envisions the public sector as
the provider of enabling conditions for the private sector to invest in productive sectors, thereby
creating decent and remunerative employment opportunities for our rapidly growing labor force.
Third, to sustain the economic growth that benefits everyone, regardless of location or social status
should be ensured. Fourth, Improve quality infrastructure. This leads to lower cost of firms and
therefore, encourage investment. Fifth, Improvement in Banking, Customs, Immigration and other
service delivery regulatory agencies is a must for increasing FDI.