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Incentives and Disincentives for Foreign Direct Investment in Less Developed Countries

In: Economic Incentives

Author

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  • V. N. Balasubramanyam

Abstract

One of the most colourful and fluid debates in development economics, which has inspired a vast literature, relates to the role of transnational corporations (TNCs), the major source of foreign direct investment (FDI), in less developed countries (LDCs). Time was when opinion was sharply divided on the issue, between those who regarded TNCs and FDI to be no more than instruments of neo-colonialism designed for the political and economic exploitation of LDCs and those who regarded them as the panacea for the development problem. Fortunately, in recent years, the ardour of both camps has cooled. Now while few regard FDI to be the sole solution for the problem of underdevelopment, there is a growing realisation that it is not a zero-sum game and both the TNCs and LDCs stand to gain from it.

Suggested Citation

  • V. N. Balasubramanyam, 1986. "Incentives and Disincentives for Foreign Direct Investment in Less Developed Countries," International Economic Association Series, in: Bela Balassa & Herbert Giersch (ed.), Economic Incentives, chapter 15, pages 401-428, Palgrave Macmillan.
    • Handle: RePEc:pal:intecp:978-1-349-18204-6_15
    DOI: 10.1007/978-1-349-18204-6_15
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