Foreign Direct Investment (FDI) is an important trading phenomenon which takes place universally. FDI is one of the key drivers for world economic growth as it alleviates and promotes international business. In fact, the primary activities of multinational corporations make a significant contribution to the practice of FDI around the world. This paper initially discusses several benefits of both inward and outward FDI fluxes in developing and transition economies. Moreover, disclosure on potential risks from FDI inflows is presented. This research also mentions current scenarios and future prospects regarding FDI in the less industrialized regions based upon the annual World Investment Report. Lastly, alternative approaches for FDI recipients to appeal to more foreign investors will be suggested.