There is general agreement that foreign direct investment is a good vehicle for the economic development of poor countries and it should replace foreign debt. This suggestion appeals to many people mainly because to borrow has become very challenging and it will likely lead to accumulation of debt that will put a budget on the economy. Your country is thinking of making a policy shift from borrowing to reliance on Foreign Direct Investment (FDI). However, you realize that many people, especially in government, are not very supportive of this idea and they are not sure how it can work.

You have been approached and appointed as a consultant to help the government achieve this policy shift. Your brief is to develop a concept paper that will focus on the following:

a)What are the benefits and problems associated with foreign direct investments inflows into the country?

b)What are the challenges that a country might have in trying to attract more foreign direct investments and why?

c)What recommendations can you give on what the country should do to attract adequate inflows of foreign direct investment.