Explain the manner in which foreign financial business collaborations support the economic development of developing countries.

Foreign collaboration is a mutual co-operation or a business understanding, between one or more resident and non-resident entities. Therefore, in a foreign financial collaboration, the inflow of foreign investment takes place in the domestic (host) country. In this process, the foreign company lends finance by: Purchasing ownership shares: Here, foreign company purchases ownership shares of the domestic company and in return gets the dividend for these shares. Giving long-term loans: Here, foreign company gives long-term loans to the domestic company and in return gets interest from these loans. Giving credit facility: Here, foreign company gives credit facility to the domestic (native) company. The native company uses this credit facility to purchase raw-materials, plant and machinery. Thus, in foreign financial collaboration, there is an inflow of finance from developed countries to developing countries. Hence, foreign financial collaborations help the developing countries more than the developed countries.