Two possible adverse effects of FDI on a host country's balance of payments are:

Question

Quizplus · Accepted Answer

Repatriation of profits and inputs from abroad can negatively affect a host country's balance of payments. Repatriation of profits means that the profits earned by the foreign company are sent back to the company's home country, leading to an outflow of currency from the host country. Similarly, if the foreign company imports inputs from abroad rather than sourcing them locally, this also results in an outflow of currency, worsening the host country's balance of payments.

Two Possible Adverse Effects of FDI on a Host Country's