The Role of Foreign Investment in Driving Economic Growth in the Manufacturing Sector

Abstract

Foreign direct investment (FDI) has emerged as a significant catalyst for economic growth, particularly in the manufacturing sector of developing economies. This study aims to examine the role of FDI in driving economic growth, analyzing both immediate and long-term impacts on local manufacturing industries. Utilizing a mixed-methods approach, the research combines quantitative data analysis from various countries with qualitative insights from interviews with industry experts and policymakers. The quantitative analysis reveals a strong positive correlation between FDI inflows and GDP growth rates in the manufacturing sector, highlighting the contribution of foreign capital to productivity and employment. Qualitative findings indicate that successful countries leverage FDI through favorable regulatory frameworks and by fostering skill development among local workers. However, the research also identifies challenges, such as regional disparities in the distribution of benefits and potential market dominance by foreign firms. The study concludes that while FDI is crucial in enhancing economic growth, it necessitates careful policy consideration to ensure equitable outcomes and sustainable practices. This research contributes to the existing literature by providing a comprehensive understanding of the complexities surrounding FDI in the manufacturing sector, offering valuable insights for policymakers aiming to optimize foreign investment strategies that promote inclusive and sustainable economic growth.