Foreign direct investment and economic development: Opportunities and limitations from a developing country perspective

Narula, Rajneesh and Portelli, Brian (2004). Foreign direct investment and economic development: Opportunities and limitations from a developing country perspective. UNU-MERIT Research Memoranda. UNU-MERIT.

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  • Sub-type Working paper
    Author Narula, Rajneesh
    Portelli, Brian
    Title Foreign direct investment and economic development: Opportunities and limitations from a developing country perspective
    Series Title UNU-MERIT Research Memoranda
    Volume/Issue No. 9
    Publication Date 2004
    Publisher UNU-MERIT
    Language eng
    Abstract FDI has attracted increasing interest from developing countries because of the perceived benefits in terms of the injection of capital, technology and knowledge. This article analyses the main analytical underpinnings concerning the inter-relationships between FDI and host country economic development. We undertake a brief review of empirical studies on the issue of FDI-led growth process. We highlight a very basic point emerging from the literature, that FDI is not a sine qua non for development. FDI-led growth is not a process that occurs automatically in the host country, and this reflects the complex nature of the interrelationships between multinational enterprises (MNEs) and host country economic agents. A vast majority of the existing empirical studies indicate that FDI does not always make a positive contribution to either economic growth and factor productivity. This is often because host countries are not able to capture the bulk of benefits associated with FDI without a certain threshold level of absorptive capabilities.
    Copyright Year 2004
    Copyright type All rights reserved
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    Created: Fri, 13 Dec 2013, 12:40:22 JST