Foreign direct investment ( disadvantage) by sangeetha I MBA

1. Name of the students: M.sangeetha
Class : l MBA
Major : Business environment
Roll number : ps4240
Submitted to : L.M. Maha Lakshmi MBA
Foreign direct investment
(disadvantage)

2. Foreign Direct
Investment
Disadvantages of Foreign Direct Investment

3. Foreign direct investment
 What is FDI ? Foreign direct Investments (FDI) is direct
Investment by a company in production Located in
another country either by buying a company in the
country or by Expanding Operations Of an Existing
Business In the country
 Why FDI ? To take advantage of cheaper wages in the
country, Special investment privilege's Such as Tax
exemption offered by the country, To gain tariff-free
access to the markets of the country.

4. Disadvantages
1.Hindrance to Domestic Investment.
As it focuses its resources elsewhere other than the investor’s
home country, foreign direct investment can sometimes
hinder domestic investment.
2. Risk from Political Changes.
Because political issues in other countries can instantly
change, foreign direct investment is very risky.

5. 3. Negative Influence on Exchange Rates.
Foreign direct investments can occasionally affect exchange
rates to the advantage of one country and the detriment of
another.
4. Higher Costs.
Foreign direct investment into building of capacity and
resources may sometimes lead to higher pricing of
manufactured products to get the return on investment.

6. 5. Economic Non-Viability.
Considering that foreign direct investments may be capital-
intensive from the point of view of the investor, it can
sometimes be very risky or economically non-viable.
6. Expropriation.
Remember that political changes can also lead to
expropriation, which is a scenario where the government will
have control over your property and assets.