MNCs primarily engage in FDI to maximize their profits by expanding their operations into new markets and accessing resources.

While foreign capital inflows can bring numerous benefits, loss of economic sovereignty is not a direct advantage.

Foreign capital inflows increase the supply of capital in the host country, leading to higher investment and economic growth.

Foreign direct investment (FDI) refers to the movement of capital from developed countries to developing countries for the purpose of establishing or expanding business operations.

Improved infrastructure is not a potential risk associated with foreign capital inflows, but rather a potential benefit.

Technology spillover refers to the transfer of technology and skills from foreign investors to the host country through various channels such as training, joint ventures, and demonstration effects.

Export quotas are not a policy instrument used to regulate foreign investment, but rather a trade policy tool.

Dividends are the portion of a company's profits that are distributed to its shareholders, including foreign investors.

Improved living standards are not a potential negative impact of foreign capital inflows, but rather a potential benefit.

Capital flight refers to the movement of capital from developing countries to developed countries, often due to political instability, economic uncertainty, or high-interest rates.

Loss of economic sovereignty is not a potential benefit of foreign capital inflows for a developed country.

Foreign capital inflows increase the supply of capital in the developed country, leading to higher investment and economic growth.

Foreign portfolio investment refers to the movement of capital from one country to another for the purpose of earning a return, typically through the purchase of stocks, bonds, or other financial instruments.

Improved infrastructure is not a potential risk associated with foreign portfolio investment, but rather a potential benefit.

Foreign direct investment refers to the movement of capital from one country to another for the purpose of establishing or expanding business operations.