Topic > Disadvantages of Foreign Direct Investment - 792

However, their results were heterogeneous across countries. Moura and Forte (2010) find that with the inflow of FDI, competition within the host country also increases. As competition increases, the economy starts to grow and end customers then have more options to choose from. Balamurali and Bogahawatte (2004) focused their research on the impact of foreign direct investment on the Sri Lankan economy. In most years, foreign direct investment has had a positive relationship with economic growth, however, the trade policy formulated by the country plays an important role in the flow of foreign direct investment. If a country is not open to economic trade, the inflow of foreign direct investment will be low. There are some current conditions that lead to a strong positive impact of FDI on economic growth. In this case two studies can be cited; Alfaro et al. (2003) in their research describe that FDI can have a greater impact on the economic growth of the host country if the financial markets of the host country are well developed. Countries that have well-developed financial markets gain more from FDI inflows than countries with weak financial markets