The trend of Foreign companies investment in developing nations in rapidly increasing. There are many benefits and drawbacks of this phenomena. The benefits of foreign business is that the country economy surges significantly and people gets employment, while on the other hand there are few drawbacks such as their product is expensive and product of local companies is sidelines.
There are number of benefits of investing money in developing nations such as it’s stabilize the country economy. Money comes to country treasury account through proper channels for investment, which increases country financial statistics, by receiving taxes and other relevant charges. Additionally, the local people of that country has higher probability of getting jobs in that international firms. Therefore, it increases employment ratio in the country which also ultimately advantageous for the country prosperity. For instance, In 2010 Telenor telecommunication company has invested millions of dollars in Pakistan to build their setup, indirectly Pakistan treasury received thousands of dollars as a tax from the company, and as result unemployed data falls by 30% the recent report revealed.
There are many drawbacks of foreign business as their products are expensive than local producst because of their expenses on establishing the business and heavy taxes on these organizations. As a result, they charge heavily consumers because they want to recover their expenses and make their business profitable. Furthermore, the other disadvantage is that it sidelines the local companies. People who runs local business are affected by the coming of products of foreign companies. For example, Starbucks is the newly international coffee brand in Pakistan which price is extremely exorbitant due to Pakistan tax system is unfriendly with them, and local coffee business falls significantly revealed the report published in news article.
In conclusion,there are myriad benefits of international investment in the developing states such as increasing country financial resources and give jobs to citizens, and at the same time it has several drawbacks by sidelining the local businesses and there products are highly over-priced.