Benefits and Drawbacks of FDI to Host States: Difference in Developing Countries and Developed Countries

Abstract: FDI has brought both benefits and drawbacks to host states and investors. But there are some inequalities in international investment systems. This article uses Spearman Rank Correlation Coefficient to test the influence of FDI, and analyzes cases in India, Peru and the United States to explore benefits and drawbacks of FDI, finding that the situation of inequality is more serious in developing host states like India and Peru, because the immorality of investors and the irresponsibility of governments. This article appeals that international investors should take social responsibilities and governments of host states should modify policies to improve the efficiency of regulation and construct a friendly business environment.