Abstract
Foreign Direct investment is identified as generating direct benefits of capital accumulation, export expansion, employment creation and labour training, all of which establish FDI as an engine of economic growth of host countries. FDI also contributes to growth indirectly through productivity gains created by increased competition in the domestic market. As regards the potential benefits of FDI to a host country- the main focus of this paper is that of increased exports.The point is made in this paper that since FDI leads to direct benefits to host countries like export-expansion it is a positive sum game. Second, because FDI is a positive growth indicator FDI has become a commercial link to build political bridges between the North and South, particularly U.S. and China, and thereby is a potential source that furthers competitive cooperation.
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