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There is conflicting evidence in the literature regarding the question as to how, and to what extent, FDI affects economic growth. FDI may affect economic growth directly because it contributes to capital accumulation, and the transfer of new technologies to the recipient country. In addition, FDI enhances economic growth indirectly where the direct transfer of technology augments the stock of knowledge in the recipient country through labor training and skill acquisition, new management practices and organizational arrangements Foreign Direct Investment (FDI) is very important to developing countries. Though foreign direct investment, individuals or corporation obtain partial or total ownership of firms located in another country. But foreign investor should have lasting interest and substantial control over the investment. FDI contribute to growth through several channels. It directly affects growth through being a source of capital formation. As a part of private investment, an increase in FDI will, by itself, contribute to an increase in total investment. An increase in investment directly contributes to growth. A large number of studies have been done in the field of foreign direct investment and economic growth. FDI is an important category of international investment that shows a long-term relationship between the direct investor and the enterprise. It indicates the influence of the investor on the management of the enterprise. Direct investment relates the initial transaction between the investor and the enterprise. It also shows the transactions between them and among affiliated enterprises, both incorporated and unincorporated.
managerial expertise,
resources and increased investment. Other factors like higher profit from investment, low labour and production cost, political stability, enduring investment climate, functional infrastructure facilities and
favourable regular environment also help to attract and retain FDI in the host country.