The countries that have not benefited tend to have been those that adopted policies which discourage trade and investment. Globalisation means that some businesses can now choose to make goods in one region of the world and sell them in others, constantly seeking out the most efficient locations. Investors, too, have the opportunity to look for the highest rate of return in a growing number of capital markets around the world. Direct investment on the rise Increased activity by large companies in developing countries can boost trade, create jobs, and help alleviate poverty. FDI also eliminates the financial risks that developing governments face if they borrow money from banks or raise it on the capital markets.
Companies bear the risk if their investments fail.
If the investment is successful, the host government benefits from increased tax revenue, and the investor benefits from the resulting profits. But many people are deeply concerned that, while multinationals might create competitive companies in the developing world, they can also destroy local enterprises which find it difficult to compete. People feel powerless to affect the actions of multinationals and often accuse such companies of ignoring their social responsibilities and rigging international regulations and codes of conduct in favour of big business. Another major concern is that globalisation contributes to poverty, inequality and social disintegration by reducing the bargaining power of low-skilled labour and increasing job insecurity. This is because production of manufactured goods can be moved from one country to another with relative ease, but workers are far more restricted in their ability to cross borders.