Q. With reference to the Foreign Direct Investment (FDI) in a country, consider the following statements:
1.It only creates jobs for highly skilled workers.
2.It improves the balance of payments (BoP) by increasing foreign exchange inflows.
3.Increased FDI generally brings advanced technologies, and expertise in the country.
How many of the statements given above are correct?
Answer: B
Notes:
Explanations –
Statement 1 is incorrect. FDI creates jobs for both skilled and unskilled workers. While foreign firms may offer higher wages to skilled workers, FDI also generates employment opportunities in manufacturing, services, and other sectors that require unskilled labor.
Statements 2 and 3 are correct. FDI brings foreign currency into the host country, contributing to capital inflows and improving the balance of payments position by reducing reliance on external borrowing. FDI often facilitates technology transfer, innovation, and managerial expertise, which enhance productivity and competitiveness in the host country.
Source: DD News
