To what extent can foreign direct investment help achieve international development goals?

Peter Nunnenkamp

No 1128, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: For 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.

Keywords: domestic investment; economic growth; poverty reduction; development financing (search for similar items in EconPapers)
JEL-codes: F30 (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (7)

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Related works:
Journal Article: To What Extent Can Foreign Direct Investment Help Achieve International Development Goals? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:1128

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