Foreign direct investment can help
to increase the reach of Sri Lanka on the basis of a large middle-income
country. Annual Gross Domestic Product The per capita development in Sri Lanka
is slightly above 4% in the last three decades. An increase of 6% will increase
the speed of reaching higher middle-income levels - Imagine that there is a
need for greater investment to get Singapore standards.
In many developing countries, FDIs
have gone to help, transfer money and portfolio investment as the largest source
of external financing. In 2017, public sector investments in Sri Lanka were at
the highest level. However, Sri Lanka's public investment is still less than
its supporters. The island's financial budget is roughly 60% of estimated
project costs. Public investment is low, and private investment is needed to
get its share of cargo, domestic investment directly from FDI and private
investment can help grow and generate employment.
FDIs can be able to implement new
technologies and innovative production and service management methods that
local firms can introduce to increase their productivity and competitiveness by
combining them with domestic and global value chains. Especially
useful in developing countries, companies can develop innovation partnerships
that are very common and can easily transfer product and administrative
strategies that refer to country references.
An increase in exports can help in
the trade balance - Sri Lanka is a continuous problem with a trade deficit. In
addition, there is a significant amount of foreign direct investment in
traditional sectors, where there has been no change in the production of Sri
Lanka's basket of exported goods for nearly 25 years. The larger
FDI will increase the reach of the Sri Lankan producer to global production
networks and facilitate the development of new activities within the existing
value chain, which will increase production costs and increase economic growth
more quickly. It will also distinguish the creation of an economy when new
sectors are presented alongside traditional sectors, making Sri Lanka more
flexible for external shocks.
With foreign direct investment,
governments also help to increase tax revenues by providing low borrowing space
- Sri Lanka's debt is high or social contribution, such as health and
education, and other budget expenditures. Since foreign investments come in
foreign currency, it is always useful in one country with external borrowing.
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