Foreign Direct Investment and Development: Launching a Second Generation of Policy Research: Avoiding the Mistakes of the First, Reevaluating Policies for Developed and Developing Countries

by Theodore H. Moran
April 2011
Book Description

This volume is the culmination of Institute investigations on the relationship between foreign direct investment (FDI) and development. Today, more than one-third of world trade takes place in the form of intrafirm transactions—that is, trade among the various parts of the same corporate network spread across borders—and the bulk of technology is transferred within the confines of integrated international production systems. This means that FDI and the operations of multinational corporations have become central to the world economy at large.

Nowhere is this more important than for developing countries. But as Theodore Moran argues in this new volume, FDI is not a single phenomenon. FDI has such different impacts in the extractive sector, infrastructure, manufacturing and assembly, and services—and presents such distinctive policy challenges—that each broad category of FDI must be treated on its own terms. Indeed, past studies that have aggregated all FDI flows together to try to find some unique relationship to host-country growth or welfare have led to unreliable substantive findings and, sometimes, mistaken policy conclusions. Moran examines each of the principal forms of FDI, extracts the best from previous analysis, and offers new findings and perspectives about how benefits from FDI in each sector can be enhanced and potential damages limited or eliminated.

Selected chapters and sections are provided for preview only.


1. Introduction [pdf]

2. FDI in Extractive Industries

3. FDI in Infrastructure

4. FDI in Manufacturing and Assembly

5. A First Look at the Impact of FDI in Services [pdf]

6. Reconsidering the Debate on FDI "Crowding Out" or "Crowding In" Domestic Investment

7. FDI, Host-Country Growth, and Structural Transformation

8. Globalization of Industry via FDI: Consequences for Developed-Country Home Economies [pdf]

9. Policy Implications [pdf]

10. Lessons and Conclusions: The Second-Generation Research Agenda



Index [pdf]

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Book Data

April 2011
ISBN Paper 978-0-88132-600-0
182 pp.

Commentaries on This Book

"This concise volume is a magisterial survey . . . Highly recommended."


"Professor Moran should be commended for successfully launching a second generation of policy research in the area of FDI and development. The writing is solid and it is inspiring to read about the reinterpretation of major first-generation works in this area."

The Developing Economies

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