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Strategies That Can be Used by Third World Countries to Improve Foreign Direct Investment Inflows

November 30, 2013

Third world countries can use certain strategies to improve foreign direct investment inflows.

The first strategy that can be used by third world countries to improve foreign direct investment inflows is that of developing good human resource pools. Investors are likely to invest where there are people capable of being engaged in productive activities without requiring too much training or retraining.

The second strategy that can be used by third world countries to improve foreign direct investment inflows is that of developing good infrastructure. Investors are likely to invest where there are good roads, where there are good, modern rail networks, where there are efficient ports… and so on.

The third method that can be used by third world countries to improve foreign direct investment inflows is that of putting in place measures to guarantee political stability.

The fourth method that can be used by third world countries to improve foreign direct investment inflows is that of offering direct incentives to prospective investors. But an effort should be made, to avoid using ‘incentives’ as a shortcut to attracting foreign direct investment. The truth of the matter is in the fact that if a country has good human resource, good infrastructure and political stability, it is bound to attract foreign direct investment ‘automatically’ without having to offer incentives.

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