Question

Please answer this question without copy-pasting texts from the internet. I’m looking for a new independent expert’s opinion. Please be clear and concise.

“The advantage of Foreign direct investment is that it uses local suppliers.” - Is this statement TRUE or FALSE? Why?

Answer 1

the above statement is false. though it is true when a foreign company enters into a local market it uses local suppliers but it hardly benifits anyone. since the domestic company would have to share the local suppliers with the foreign companies, the resource being limited supply for the domestic companies would go down if the foreign company has higher financial resources. this would result into domestic companies loosing their businesses to foreign companies. for a economy to grow it requires small businesses like cottage industries. even though by employing local suppliers FDI may create job opportunities but small domestic businesses suffer in the long run.