THE ROLE OF FOREIGN DIRECT INVESTMENT (FDI) IN ECONOMIC GROWTH OF DEVELOPING COUNTRIES

Abstract

Foreign Direct Investment (FDI) plays a critical role in the economic development of low- and middle-income countries. This article explores the mechanisms through which FDI influences economic growth, including technology transfer, employment creation, capital accumulation, and integration into global markets. While the benefits of FDI are substantial, there are also risks such as profit repatriation, market dominance by foreign firms, and environmental concerns. Through analysis of empirical data and case studies from Asia and Africa, this article evaluates how developing countries can maximize the developmental impact of FDI.