r of ways. They often restrict entry to certain sectors, or require that primarily domestic investors own firms operating in those sectors. This is usually done for cultural reasons or for reasons of national security. More importantly, national governments impose performance requirements on foreign firms operating in their territory. A few of the most widespread performance requirements have been related to trade. To name a few, some governments insist that MNCs, export a minimum proportion of their output, or source a minimum proportion of their inputs locally. While these requirements discourage FDI and reduce the efficiency of international investment, they enable the host country to maximize the benefits of FDI. In conclusion there are many intricacies, which go into FDI. In this paper there has been a discussion about the effects that FDI has on the host countries in which MNC’s penetrate. It has been found that there are many benefits and costs for the MNC’s(source country) as well as the host countries. While FDI increases there should also be an increase in government awareness. This increase occurs because of the increase in investment in the host country and investments have an effect on the host country. In lieu of this certain policies and interventions are introduced to deal with this foreign investment. To conclude this paper I have included an article I found about foreign direct investment, which has been included below....
