aımnova
DashboardMy LearningCrash CoursesStudy Plan

Aimnova site navigation

Stay in the loop

Get the latest study resources and updates

New features, study tips and exam insights — straight to your inbox.

IB Diploma

  • IB Past Papers
  • IB Study Notes
  • IB Question Bank
  • IB Mock Exams
  • IB Revision

IB Subjects

  • IB Math AA
  • IB Math AI
  • IB Economics
  • IB Business Management
  • IB Physics
  • IB Biology
  • View all IB subjects→

IB Past Papers

  • IB Math AA HL Past Papers
  • IB Math AA SL Past Papers
  • IB Math AI HL Past Papers
  • IB Math AI SL Past Papers
  • IB Economics HL Past Papers
  • IB Economics SL Past Papers
  • IB ESS Past Papers
  • View all past papers→

Study Resources

  • Study Notes
  • Question Bank
  • Mock Exams
  • Crash Courses
  • Flashcards
  • Revision Guide
  • Exam Skills
  • Command Terms
  • Grade Calculator
  • Exam Timetable 2026

Aimnova

  • Features
  • Pricing
  • For Teachers
  • For Schools
  • For Parents
  • About Us
  • Blog
  • Contact
aımnova

IB study, practice and feedback built around the real exam.

TermsPrivacyCookies·© 2026 Aimnova. All rights reserved.d92d737

Aimnova is not affiliated with or endorsed by the International Baccalaureate Organization (IB).

NotesEconomics HLTopic 4.10Inward foreign direct investment
Back to Economics HL Topics
4.10.44 min read

Inward foreign direct investment (Economics HL)

IB Economics · Unit 4

Smart study tools

Turn reading into results

Move beyond passive notes. Answer exam-style questions, get AI feedback, and build the skills that earn top marks.

Get Started Free

Contents

  1. 1What FDI brings
  2. 2What FDI can cost
  3. 3Exam-style question

FDI: a multinational builds or buys a firm abroad.

What FDI can bring

1

Capital

Money a poor country cannot save itself: it fills the savings gap.

Investment
2

Jobs and skills

Workers learn new methods; local suppliers win orders.

Human capital
3

Technology

Modern machines and know-how raise productivity.

Productivity
4

Exports and tax

Foreign currency flows in; the firm pays tax.

Revenue
A poverty cycle: low income, then low savings, then low investment in human and physical capital, then low productivity, then low output and growth, back to low income; foreign direct investment raises low investment in human and physical capital.
FDI raises investment in physical capital.

Free preview

This is the free notes preview

You're reading the free notes. Aimnova Pro unlocks the full study experience — and you can try it with your first topic free to keep:

  • FlashcardsLock in vocabulary and key terms with spaced repetition.
  • Practice questionsAnswer exam-style questions and get instant AI marking.
  • Mock exams & past-paper vaultSit full mocks and see exactly how examiners award marks.
  • Personalised study planA daily plan built around your exam date and weak areas.
Start Studying Free Full access to Aimnova Pro · cancel anytime

FDI also has costs, mostly for who keeps the gains.

What FDI can cost

1

Profits leave

Profits are sent back to the parent company abroad.

Repatriation
2

Low tax

Tax breaks to attract the firm, and profits shifted to low-tax countries.

Revenue lost
3

Few links

Capital-intensive plants hire few local workers and buy little locally.

Enclave
4

Damage

Mines and plants may pollute, with weak rules to stop them.

Environment

Memorize terms 3x faster

Smart flashcards show you cards right before you forget them. Perfect for definitions and key concepts.

Try Flashcards FreeYour first topic is free to keep • No credit card required

Paper 1 asked this in May 2024 and May 2026, as part (b) for 15 marks.

IB-style questionDiscuss[15 marks]

Using real-world examples, discuss the benefits and costs of inward foreign direct investment (FDI) for economically less developed countries.

Model answer plan

See the answer broken into clear points, with guidance on how each point earns marks.

Claim your free topic

How the 15 marks are given

MarksWhat your answer needs
13–15Theory fully explained, terms right all the way through, balanced evaluation, real examples fully developed to support the argument
10–12Theory explained, terms mostly right, evaluation mostly balanced, real examples developed
7–9Theory partly explained, some evaluation but one-sided, examples partly developed
4–6Theory only described, evaluation superficial, examples only named
1–3Theory stated but not relevant, no evaluation

Try an IB Exam Question — Free AI Feedback

Test yourself on Inward foreign direct investment. Write your answer and get instant AI feedback — just like a real IB examiner.

the term foreign direct investment (FDI). [2 marks]

Related Economics HL Topics

Continue learning with these related topics from the same unit:

4.1.1Benefits of international trade4.1.2Free trade on a diagram: exports and imports4.1.3Absolute and comparative advantage (HL)4.1.4Limitations of comparative advantage (HL)
View all Economics HL topics
Improve your exam techniqueCommand terms, paper structure, and mark-scheme tips for Economics HL
Previous4.10.3Interventionist policiesNextForeign aid and multilateral assistance4.10.5

15 questions to test your understanding

Reading is just the start. Students who tested themselves scored 82% on average — try IB-style questions with AI feedback.

Start FreeView All Economics HL Topics