FAQs on Foreign Investment: Foreign Capital & Aid Video Lecture - Indian Economy for UPSC CSE
|1. What is foreign investment?
Ans. Foreign investment refers to the direct or indirect investment made by individuals, companies, or governments from one country into another country's businesses, assets, or projects. It can take various forms such as the purchase of stocks, real estate, or the establishment of new businesses.
|2. How does foreign capital contribute to economic growth?
Ans. Foreign capital, in the form of investments from abroad, can contribute to economic growth by providing additional financial resources for businesses to expand their operations, invest in new technologies, and create employment opportunities. It can also facilitate the transfer of knowledge, skills, and technology, which can enhance productivity and competitiveness in the domestic economy.
|3. What are the potential benefits of foreign aid?
Ans. Foreign aid can provide various benefits to recipient countries, including financial resources to support development projects, humanitarian assistance during crises, and technical expertise to address specific challenges. It can also promote diplomatic relations between countries and help alleviate poverty, improve healthcare, education, and infrastructure in recipient nations.
|4. How does foreign investment impact the host country's economy?
Ans. Foreign investment can positively impact the host country's economy by attracting capital, creating jobs, and stimulating economic growth. It can also facilitate the transfer of technology, skills, and knowledge, which can enhance productivity and competitiveness in domestic industries. However, it can also lead to potential risks such as increased dependency on foreign capital and potential loss of control over strategic assets.
|5. What are the main factors that attract foreign investment?
Ans. Several factors can attract foreign investment, including political stability, favorable economic policies, a skilled workforce, access to natural resources, infrastructure development, and a conducive business environment. Additionally, tax incentives, trade agreements, and intellectual property protection can further incentivize foreign investors to choose a particular country for their investments.