Foreign direct investment and development

by Theodore H. Moran

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. 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 suggest