Foreign Direct Investment

Our fictitious client: A government whose country has a population of 66.65 million people want to know how they can attract more foreign direct investment to its shores. The current economic climate of the country is experiencing slow growth. There is also political instability and exchange rate volatility because of exits from European Union member states which are raising barriers to entry through higher tariffs. There is the problem of stagflation, a toxic mixture of economic growth and high inflation. The government wants to tackle this problem because it leads to fewer jobs, and less wages meaning less money to spend for families.

The government also wants to take back control of its borders which means there is going to be a change which will see fewer migrant workers coming to its shores. Therefore, there is going to be less investment from foreign firms looking to take advantage of cheap migrant workers. The government has introduced a national minimum wage which is pleasing to existing members of society but again lessens the attractiveness of foreign firms looking to exploit its shores for cheap labour. 

Question: Provide advice to the government on how you would attract foreign direct investment to its shores. Recommendations: Provide recommendations to the government on the issue of higher tariffs and stagflation. 

Points to take into consideration.

A government would want to attract FDI to it shore because of the benefits that come with it. FDI can boost an economy by creating jobs. Foriegn firms bring with them new technologies but from a governments perspective FDI will increase productivity and generate tax revenue.  

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