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Foreign direct investment and industrial development

In: Transforming Poor Economies

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Abstract

Foreign direct investment (FDI) is widely considered a major source of new useful information for local firms in developing countries. FDI studies attempt to quantify the effect of information spillovers by examining the relationship between the presence of foreign firms and the productivity of local firms. Studies of global value chains (GVC) explore how the transactional relationship between foreign and local firms is related to the information transfer from the former to the latter without undertaking quantitative analyses. I argue that our current knowledge of information transfer is far from adequate and that more useful analyses can be done by combining the strengths of FDI and GVC studies. I also suggest that conscious technology transfer associated with transactions between foreign and local firms, rather than just information spillover is critically important for the development of local firms and industries.

Suggested Citation

  • ., 2024. "Foreign direct investment and industrial development," Chapters, in: Transforming Poor Economies, chapter 9, pages 159-176, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:23579_9
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    File URL: https://www.elgaronline.com/doi/10.4337/9781035339297.00017
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    Cited by:

    1. Abdulrasheed Zakari & Thanh Le & Rabindra Nepal, 2025. "Sectoral FDI and environmental sustainability in Africa: the role of sustainable investment," Empirical Economics, Springer, vol. 69(4), pages 1821-1850, October.
    2. Gonçalves dos Santos, João Pedro & Moutinho, Vítor Manuel Ferreira & Madaleno, Mara & Teixeira, Zélia Maria da Silva Serrasqueiro, 2025. "Examining the Effect of Macroeconomic, Institutional, and Capital Market Drivers on Infrastructure Investment," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 165-190.
    3. Lin, Lin & Ortega, David L., 2025. "Drivers of state legislative actions restricting foreign holdings of U.S. agricultural land," Food Policy, Elsevier, vol. 134(C).
    4. Yingjie Fu & Chang Song, 2025. "Global Value Chain Embeddedness and Potential for National Export Structure Transformation," Journal of International Development, John Wiley & Sons, Ltd., vol. 37(4), pages 835-856, May.
    5. Niu, Baozhuang & Deng, Xinhai & Xie, Fengfeng & Dong, Jian, 2026. "From vision to impact: Can zero-defect manufacturing balance worker well-being, environmental sustainability, and fulfillment resilience?," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 206(C).
    6. Sachin Adhikari, 2025. "Examining The Economics Of Growing Cut Flowers In Kathmandu Valley," Food & Agribusiness Management (FABM), Zibeline International Publishing, vol. 6(1), pages 40-44, April.
    7. Riccarda Rosenball, 2025. "The Gender Pay Gap in German Manufacturing: How Exporters Drive Wage Equality Trends," Graz Economics Papers 2025-08, University of Graz, Department of Economics.
    8. Larsen, Mathias, 2025. "Green industrial policy under financial constraints: Insights from India’s state-led decarbonization," World Development, Elsevier, vol. 195(C).
    9. Ren, Qiaoqiao & Hu, Chengxuan & Xu, Min & Song, Jiatong, 2026. "Association rule mining of damage severities in autonomous vehicle rear-end crashes with supplementary built environment data," Reliability Engineering and System Safety, Elsevier, vol. 265(PA).
    10. Han, Xibing & Zhang, Yue & Liu, Chengqing & Cheng, Yu, 2025. "Decomposing the impact of digital technology innovation: Technology frontiers, efficiency, and spatial externalities in China's decarbonization," Energy Economics, Elsevier, vol. 152(C).

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