Foreign Direct Investment Policies in the Asian NIEs

Sanjaya Lall

Chapter 8 in Learning from the Asian Tigers, 1996, pp 197-214 from Palgrave Macmillan

Abstract: Abstract Two broad inter-related policy issues arise for developing countries in the context of international investment.1 The first is whether and how much FDI to allow in, i.e. if one should exercise selectivity in letting in MNCs. The second is, having allowed in FDI, whether to intervene selectively in the operations of MNCs, setting conditions for their operations, and targeting investments of higher ‘quality’. Both forms of intervention may be desirable if there is a perceived divergence between private and social returns from MNC activity in free markets. The first set of issues is determined by the costs and benefits of FDI to the developing host country as compared with alternative ways of accessing capital, technology and skills. The second is determined by market failures in domestic (and foreign) markets which guide MNC activities and which may be altered to obtain larger social benefits for the host economy.

Keywords: Market Failure; Industrial Policy; Technological Capability; Local Firm; Asian Tiger (search for similar items in EconPapers)
Date: 1996
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-38989-2_8

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DOI: 10.1057/9780230389892_8

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