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  1. FDI create higher output and jobs
  2. FDI can help finance a current account deficit
  3. Long-term capital inflows (FDI) are more sustainable than short-term portfolio inflows
  4. All of the above
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Option 4 : All of the above

Advantages of Foreign Direct Investment (FDI)

  • Capital inflows create higher output and jobs.
  • Capital inflows can help finance a current account deficit.
  • Long-term capital inflows are more sustainable than short-term portfolio inflows. 
  • Recipient country can benefit from improved knowledge and expertise of foreign multinational.
  • Investment from abroad could lead to higher wages and improved working conditions, especially if the MNCs are conscious of their public image of working conditions in developing economies.
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