Question

Explain any three disadvantages of FDI.

Answer 1

1. Exploiting Natural Resources: The FDI Companies deplete natural resources like water, forest, mines, etc. As a result, such resources are not available for the usage of the common man in the host country.

2. Heavy Outflow of capital: Foreign companies are said to take away huge tunes in the form of dividends, royalty fees, etc. This causes a huge outflow of capital from the host country.

3. Not Transferring Technology: Some foreign enterprises do not transfer the technology to developing countries. They mostly transfer second-hand technology to the host country.