Foreign Direct Investment - Is The Glass Half Full Or Half Empty?

1. If FDI is targeted to green-investment, employment will rise, possibly involving a Keynesian multiplier of income and consumption. If FDI is targeted to an acquisition of a large inefficient firm, the priority of profits will possibly lead, in the short run, to waves of dismissals and a rise of unemployment.
2. Wages are usually higher in foreign affiliates than in, local firms, sometimes with the crowding out of the latter on the labor market (i.e. they do not find any more workers at the previous level of wage and they are not profitable at the new level, because of their lagging productivity).
3. The local workforce is put into contact with that knowledge and, more in general, with the foreigners' mentality.
4. Thus, a mid-term effect of FDI can be the mushrooming of new businesses in the same industry by competitors and past key workers. In parallel, the presence of a big foreign investor can re-orient the education & training courses offered in the region, giving rise to a "pool" of specialized skills, which in turn become a competitive advantage for the investor as well as an incentive for ther international firm locate there.

Further reading:

http://www.economicswebinstitute.org/