ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Foreign Direct Investment-A Solution to BOP Problems

Foreign Direct Investment A Solution to BOP Problems? Pronab Sen This paper addresses the central problematic: Do FDI inflows improve the short-run balance of payments or do they require additional foreign exchange funding in the form of foreign borrowings or through depletion of foreign exchange reserves? The answer to this question is crucial not only for formulating a policy structure for foreign investments but also in determining the position that developing country governments should take with regard to pressures for liberalising controls on foreign equity.

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