Final answer:
The direct effect of FDI on employment in a host country occurs when a multinational enterprise (MNE) hires local citizens, which can lead to a positive impact on the economy and standard of living. Critics, however, highlight potential negative aspects such as government influence and environmental concerns.
Step-by-step explanation:
The question asks about the direct effects of Foreign Direct Investment (FDI) on employment in the host country by a multinational enterprise (MNE). The correct answer is B) Employs a number of host country citizens. When an MNE enters into a host country, it generates employment opportunities by hiring locally, thus contributing to job creation. The effects of FDI are multifaceted and include technology spillovers and the potential for economic growth and infrastructure development.
Proponents of MNEs argue that they bring numerous benefits, such as well-paying jobs, technology transfer, and local infrastructure development. These contributions can lead to a rise in the standard of living and expansion of support industries in the host country.
On the other hand, some criticisms of MNCs include their potential influence on governments, the displacement of local businesses, and the negative impact on the environment due to lax regulations in certain countries.
Overall, the direct effect on employment due to FDI arises when MNEs hire local citizens, bringing a positive change to their livelihoods and contributing to economic improvements within the host country. However, it is essential for governments and organizations to ensure that these benefits are balanced with fair labor practices and environmental protection.