Is Foreign Investment Good for Development?
The impact of foreign direct investment (FDI) on development is a much debated topic. International financial institutions, such as the World Bank and the IMF, as well as the OECD and its member states, have increasingly promoted FDI because it creates new jobs, spreads best-practice social and environmental standards, and stimulates the transfer of technology, finally leading to economic growth. On the other hand, many NGOs, labour unions and civil society groups have emphasised the negative effects of FDI, illustrated by detailed case studies documenting human rights violations, harmful environmental practices, and tax evasion by Transnational Companies (TNCs) in developing countries. This briefing paper provides an academic literature review on the relationship between FDI and development which may serve as background to the debate on these issues.
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