Foreign Direct Investment

International transfers are significant features of the global economy. Foreign direct investment (FDI) is
one of the most important components of such transfers. Being critical to the formation of capital in
both developed as well as developing countries and much research into its impact has grown
substantially over the years. Most countries, especially developing nations, target to attract FDI into
their economies as they expect long-term economic growth from additional stable resources in host
countries. Private capital inflows in the form of FDI include capital, technology, managerial and
organizational practices, training, and trade, which linked together help promote economic growth in
the host country. With the transfer of technology and technical know-how FDI is supposed to play an
important role in introducing improved products and processes. The importance of FDI, however, does
not diminish the role of productive investment from the domestic economy. While private domestic
investment can be regarded as a permanent and reliable channel to enhance productive capacity,
investment in public sector has been considered important in infrastructure, research and development
and training. Public sector expenditure, however, also has a negative side in that it is likely to crowd out
private investment and public sector is often found to be highly inefficient in resource management.
Foreign Direct Investment both have good and bad effect with the Philippine economic growth which
include the factors mentioned above. The Philippine economy is currently one of the fastest growing in
the region. Both remittances and foreign direct investment (FDI) are at record levels, the business
process outsourcing sector is booming, the country is improving in international rankings and has been
upgraded by credit rating agencies. The Philippines has finally achieved some measure of success.
Reforms in some key sectors such as telecoms have paid off handsomely and have helped to spur a new
industry: business process outsourcing. The Philippines has improved in some international
competitiveness rankings and has strengthened its investment promotion and facilitation strategy.
Because the current administration is focused on growing the Filipino economy, the Philippines' FDI
climate has gradually improved over the past ten years, and it appears that this trend will continue in
the years to come. The Philippines remains an emerging market for FDI. Major improvements over the
last few years to the regulatory landscape have increased2 the attractiveness of the Philippines as a
destination to deploy capital. Those improvements combined with a continued governmental focus on
reducing red tape, increasing public funding of infrastructure, potential easing of certain foreign
ownership restrictions and an opening up of the Philippines as a gateway into the wider Asian market,
bode well for FDI in the coming years.