To What Extent Can Foreign Direct Investment Help Achieve International Development Goals?
AbstractFor FDI to help achieve the international development goal of halving absolute poverty, two conditions have to be met. First, poor developing countries need to be attractive to foreign investors. Second, the host-country environment in which foreign investors operate must be conducive to favourable FDI effects with regard to overall investment, economic spillovers and income growth. This paper argues that it is much more difficult to benefit from FDI than to attract FDI. Weak markets and institutions typically prevailing in poor countries tend to seriously constrain the growth-enhancing and povertyalleviating effects of FDI. The crux is that creating an environment in which FDI may deliver social returns will take considerable time exactly where development needs are most pressing.
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Bibliographic InfoPaper provided by Kiel Institute for the World Economy in its series Kiel Working Papers with number 1128.
Length: 46 pages
Date of creation: Oct 2002
Date of revision:
Development financing; domestic investment; economic growth; poverty reduction;
Other versions of this item:
- Peter Nunnenkamp, 2004. "To What Extent Can Foreign Direct Investment Help Achieve International Development Goals?," The World Economy, Wiley Blackwell, vol. 27(5), pages 657-677, 05.
- F30 - International Economics - - International Finance - - - General
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