1. Achieving Higher Growth in National Income Developing countries get much needed capital through FDI to achieve higher rate of growth in national income.

2.International Finance Help in Addressing BOP Crisis FDI provides inflow of foreign exchange resources into a country. This helps the country to solve adverse balance of payment position.

3. Faster Economic Development FDI brings technology, management and marketing skills along with it. These are crucial for achieving faster economic development of developing countries.

4. Generating Employment Opportunities: FDI generates a lot of employment opportunities in developing countries, especially in high skill areas.

5. Encouraging Competition in Host Countries Entry of FDI into developing country promotes healthy competition therein. This leads to enterprise in developing countries operating efficiently and effectively in the market. Consumers get a variety of products of good quality at market determined price which usually benefits the customers.