Book Description

Foreign direct investment (FDI) has grown dramatically and is now the largest and most stable source of private capital for developing countries and economies in transition, accounting for nearly 50 percent of all those flows. Meanwhile, the growing role of FDI in host countries has been accompanied by a change of attitude, from critical wariness toward multinational corporations to sometimes uncritical enthusiasm about their role in the development process.

What are the most valuable benefits and opportunities that foreign firms have to offer? What risks and dangers do they pose? Beyond improving the micro and macroeconomic "fundamentals" in their own countries and building an investment-friendly environment, do authorities in host countries need a proactive (rather than passive) policy toward FDI?

In one of the most comprehensive studies on FDI in two decades, Theodore Moran synthesizes evidence drawn from a wealth of case literature to assess policies toward FDI in developing countries and economies in transition. His focus is on investment promotion, domestic content mandates, export-performance requirements, joint-venture requirements, and technology-licensing mandates. The study demonstrates that there is indeed a large, energetic, and vital role for host authorities to play in designing policies toward FDI but that the needed actions differ substantially from conventional wisdom on the topic. Dr. Moran offers a pathbreaking agenda for host governments, aimed at maximizing the benefits they can obtain from FDI while minimizing the dangers, and suggests how they might best pursue this agenda.

Foreign Direct Investment and Development is an excellent textbook for courses in trade, development, and international political economy.

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Editorial Reviews

Ted Moran ... with rare objectivity and commendable thoroughness ...
point[s] the way to policies that could be mutually beneficial to both governments and enterprises.

Raymond Vernon, Clarence Dillon Professor of International Affairs Emeritus, Harvard University

... Excellent ... this study provides a lucid and thorough review of the relevant literature on policies towards FDI in developing countries, and gleans from it the most appropriate policy recommendations.

Katharine Wakelin, University of Nottingham, The World Economy (November 1999)



Introduction and Synopsis

I. Foreign Direct Investment in Developing Countries and Economies in Transition: Opportunities, Dangers, and New Challenges

1. The Impact of Foreign Direct Investment on Host-Country Development: The Heritage of Theory and Evidence

II. Host-Country Policies to Shape Foreign Investor Activities: Investment Promotion, Domestic-Content Requirements, and Export Performance Requirements

2. Theoretical Considerations About Host-Country Intervention in Investment Promotion, Domestic-Content Requirements, and Export-Performance Requirements

3. Foreign Firms and Host-Country Investment Promotions

4. FDI and Domestic-Content Requirements

5. FDI and Export-Performance Requirements

6. Comparative Advantage and the Globalization of Manufacturing Industries: The Struggle to Tilt the Playing Field for International Investment

III. Host-Country Policies to Constrain Ownership Policies to Constrain Ownership on the Part of Foreign Direct Investors: Joint-Venture Mandates and Technology Licensing Requirements

7. Foreign Direct Investment and Joint-Venture Requirements

8. Foreign Direct Investment and Technology-Licensing Requirements

IV. Host-Country Policies Toward Natural-Resource and Private Infastructure Investment

9. Structural Vulnerability, Imperfect Contracts, and "Political Risk" in Natural-Resource and Private Infastructure Projects

V. Findings, Conclusions, and Policy Implications

10. Incorporating Foreign Direct Investment into the Development Process: From Traditional Concerns to a New Agenda for Action



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