how interest rate will effect the decision of Foreign direct investment?

Answer #1

In the case of a decrease in domestic interest rates, they might invest less money (as the value of the money to the foreign party will be relatively constant)…in the case of a country with increasing domestic interest rates, they may invest more money, as the value will decrease of that pile of money over time.

In the case of a recipient country with flat or decreasing interest rates, they’re likely to also receive less money, as the money will be worth the same, or more…however, in the other scenario, they’re likely to get more money invested, as the worth will decrease over time.

Hope that helps.

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