Globalization through FDI has become significantly more important since the early 1990s.Various groups of developing countries have participated to a strikingly different degree in the FDI boom. More specifically, it begins with activity of MNE (Multi National Enterprises) strategies, before looking at the salient features of FDI and the factors that drive its expansion and that will be doing so in the future to boost countries economy in a sustainable way. An assessment of the role of FDI in trade and the transfer of technology and its impact on sustainable development in terms of impact on social and economic equality and environment. Since recent financial crises in Asia and Latin America, developing countries have been strongly advised to rely primarily on foreign direct investment (FDI) in order to promote economic development on a sustainable basis and also in developing world India and elsewhere MNCs are accused of not only neglecting but undermining the environmental and ecological consideration thereby threatening livelihood base of the people. This paper will cover issues & challenges that FDI pose to in developing nations, whether FDI contributes to the competitiveness, sustainability in economic growth and development of host countries or not. However, the distribution of FDI does not support the widely held view that FDI is concentrated in just a few developing countries. Fiscal and financial incentives offered to foreign investors may do more harm than good by giving rise to costly "bidding wars." The importance of traditional determinants of FDI, notably the size of local markets, can no longer be taken for granted. Globalization tends to induce a shift from purely market-seeking FDI to new types of FDI, for which the international competitiveness of local production is highly relevant. In the end it will also focus on the agenda about FDI-Is it an option for sustainable growth or a compulsion?
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