UNDERSTANDING FDI-ASSISTED ECONOMIC DEVELOPMENT by Rajneesh Narula, Sanjaya Lall ISBN 9780415568371, 9780415348164, 0415568374, 0415348161 instant download

UNDERSTANDING FDI-ASSISTED ECONOMIC DEVELOPMENT by Rajneesh Narula, Sanjaya Lall ISBN 9780415568371, 9780415348164, 0415568374, 0415348161 instant download

Over the last two decades or so, there has been a significant shift away from a inward-looking, import-substituting approach towards a more outward-looking, export-oriented policy orientation. The reasons for this shift are complex, but have to do with developments associated with globalization, trade and debt deficits faced by IS-driven economies, as well as the acknowledged success of the Asian newly industrialized economies (NIEs) in technological and economic 'leapfrogging' within an outward-oriented approach. One of the key features of policy liberalization is the need to attract foreign direct investment (FDI) as a means to acquire or improve technological capabilities through multinational enterprise (MNE) activity.

The role of the MNE as an additional source of capital and technology is one of the key features of this new openness, as alternative sources of capital have become scarcer, exacerbated by economic and financial crises. The failure of protected industries in LDCs to become competitive on global markets has highlighted the limitations of the arms-length technology transfer approach. At the same time, the need to build strong local capabilities has not diminished; on the contrary, it has risen as increasingly mobile factors seek strong complementary factors in sites where they will locate.

Hence, in recent years, both LDC governments and foreign donors have increasingly come to focus on the role MNEs and FDI can play in development. This has been accompanied by a lifting of many types of regulations that previously limited the role of FDI and MNEs in many developing countries, and a reassessment among donors of the role of public…