Foreign Direct Investment by Multinational Firms and Transfer of Technology to Developing Nations like Nepal

Abstract

Foreign direct investment (FDI) is a vital source of capital for the financial growth of developing countries. This study was conducted to find out the FDI by international companies and the allocation of technology, with a particular focus on developing nations like Nepal. The data was collected through secondary resources, i.e., journals, books, reports, websites, etc. The results were analyzed under the policies related to FDI. This study found that Nepal’s laws and regulations governing foreign investment are controlled by the Foreign Investment and Technology Transfer Act (FITTA) (1992). The effect of MNCs in Nepal is that small local businesses are becoming more export-oriented, especially in wool and carpet. Furthermore, MNCs offer a bundle that includes new technology, funding, access to markets, and managerial approaches for the formation and distribution of services and goods. Nepal has encouraged FDI inflows in recent years by creating an investor-friendly environment and implementing reforms related to FDI. The benefits of FDI depend on the technical skills of the companies in the host country. So, there is a need for Nepal to improve technical skills in the country to attract more FDI to increase GDP in the country.