Some people believe that countries should invite foreign companies to open their branches, offices and factories in order to develop their economies. Others think countries should invest in their own companies instead. Discuss both views and give your opinion.
Many countries have been battling slow economic growth since year 2008. Some countries are on the verge of a financial breakdown. Financial problems and negative growth have encouraged many governments to solicit foreign investment in their countries. There are several advantages to attracting foreign investment. There are some disadvantages too.
On the bright side, foreign investment helps the local economy in many ways. When foreign companies open their branches and offices in a country, they help generate several jobs. This gives a boost to the local economy. The arrival of new companies also increases the competition in the market. This will encourage companies to price their products competitively. Tough competition will also improve the quality of products and services. It is evident that foreign investment benefits not only the country but also the consumer.
On the flip side, foreign investment has its fair share of disadvantages too. One should not forget that companies that set up their establishments on the foreign soil are driven by their desire to make more money. They aren’t looking to engage in charity work. They are financially stronger than local companies and hence they can easily stifle competition. Also in the past many multinational companies have been accused of engaging in unethical practices to kill local competition. Because of these reasons many economists feel that governments should help local companies instead of inviting foreign companies.
Considering the arguments in favor of and against inviting foreign companies, it is not hard to see that there are several benefits to attracting foreign companies. There are a few disadvantages too. However, governments can solve these problems by enacting proper laws to ensure healthy competition. By doing this governments can also protect small businesses and enable economic growth.