In this thesis, I examine the relationship between foreign direct investment (FDI) in a host country and human development. Human development comprises the education, health, and income opportunities available to people in a particular country. I assert that FDI can potentially enhance human development through economic growth and higher income in a host country. However, alongside these benefits, FDI can also have negative effects by worsening a host country's income inequality. Given FDI's counteracting positive and negative effects on human development, I propose that FDI's net effect on human development takes the form of an inverted U-shaped relationship. I further predict that a host country's institutional maturity, defined as the degree of institutional development within a country, plays an important role in understanding which national contexts strengthen or weaken this relationship. I contend that the inverted U-shaped relationship between FDI and human development is moderated by a host country's institutions, and assess this moderation with respect to two dimensions: business sophistication and transparency. Business sophistication measures the extent to which a country possesses supplier networks, technology production, and advanced business practices (World Economic Forum, 2015). My results show that countries with low business sophistication have a pronounced inverted U-shaped relationship between FDI and human development, while countries with high business sophistication experience an attenuated effect (flattened inverted U-shaped). Similarly, transparency measures public-sector employees and executives' accountability and performance, as well as civil society's access to information about public affairs (World Bank, 2016). My results show that economies with low transparency have a steeper inverted U-shaped relationship between FDI and human development; by contrast, economies with high transparency exhibit a flatter inverted U-shaped curve. My study makes three core contributions to the field. First, it adds to development economics scholars' analysis of human development by proposing that income inequality is a key FDI cost. Therefore, while FDI can indeed enhance human development (as past studies have shown), it can also have a negative effect by worsening a host country's income inequality. Second, my study facilitates better knowledge of the relationship between FDI and human development by integrating the positive and negative effects of this relationship. Third, in line with studies that propose the contingent effects of FDI (Meyer & Sinani, 2009), my study contributes to understanding how a host country's institutional maturity in the private and public sectors affects the strength of FDI's curvilinear effect on human development.

Provides a comprehensive review of the issues related to the impact of FDI on development as well as to the policies needed to maximise the benefits.

The effect on developing countries of the arrival of foreign direct investment (FDI) has been a subject of controversy for decades in the development community. The debate over the relationship between FDI in developing countries and the progress of these countries towards human development is an ongoing and often heated one. Adopting an interdisciplinary perspective combining insights from international investment law, human rights law and economics, this book offers an original contribution to the debate. It explores how improvements ...

We test the effect of foreign direct investment (FDI) on economic growth in a cross-country regression framework, utilizing data on FDI flows from industrial countries to 69 developing countries over the last two decades. Our results suggest that FDI is an important vehicle for the transfer of technology, contributing relatively more to growth than domestic investment. However, the higher productivity of FDI holds only when the host country has a minimum threshold stock of human capital. In addition, FDI has the effect of increasing total investment in the economy more than one for one, which suggests the predominance of complementarity effects with domestic firms.

Seminar paper from the year 2006 in the subject Business economics - Economic Policy, grade: 1,3, Berlin School of Economics, course: Development Economics, language: English, abstract: Developing countries today have to deal with the question of how to increase economic growth. This phenomenon depends on a variety of factors: political, economic and social ones. Due to globalisation, foreign direct investment (FDI) has become an often discussed issue in literature and is seen as a key factor for economic growth by many developing countries by now. But the effects of FDI are not necessarily positive. In this written assignment, the author would like to introduce policies to be conducted in order to maximise the positive effects and to minimise the negative ones. This paper will start with a definition of the terms developing country and foreign direct investment. In the second part, a short introduction in the controversial theories about the impact on economies of developing countries will be presented. In the following, several national and international policy considerations will be introduced. The paper will end with a conclusion.

In the 1990s, foreign direct investment began to swamp all other cross-border capital flows into developing countries. Does foreign direct investment support sound development? In particular, does it contribute to poverty reduction?

In development literature Foreign Direct Investment (FDI) is traditionally considered to be instrumental for the economic growth of all countries, particularly the developing ones. It acts as a panacea for breaking out of the vicious circle of low savings/low income and facilitates the import of capital goods and advanced technical knowhow. This book delves into the complex interaction of FDI with diverse factors. While FDI affects the efficiency of domestic producers through technological diffusion and spill-over effects, it also impinges on the labor market, affecting unemployment levels, human capital formation, wages (and wage inequality) and poverty; furthermore, it has important implications for socio-economic issues such as child labor, agricultural disputes over Special Economic Zones (SEZ) and environmental pollution. The empirical evidence with regard to most of the effects of FDI is highly mixed and reflects the fact that there are a number of mechanisms involved that interact with each other to produce opposing results. The book highlights the theoretical underpinnings behind the inherent contradictions and shows that the final outcome depends on a number of country-specific factors such as the nature of non-traded goods, factor endowments, technological and institutional factors. Thus, though not exhaustive, the book integrates FDI within most of the existing economic systems in order to define its much-debated role in developing economies. A theoretical analysis of the different facets of FDI as proposed in the book is thus indispensable, especially for the formulation of appropriate policies for foreign capital.

During the past twenty or so years, foreign direct investment (FDI) flows have increased at rates approaching the astounding, especially so during the 1990s. While much of the increase was due to unprecedented cross-border mergers and acquisitions among high-income countries, the amount of FDI flowing to developing nations also grew substantially. This volume examines the economics of this FDI to developing countries. Some chapters are theoretical in nature, others empirical, and still others are largely policy-oriented. Topics covered include whether FDI makes an autonomous contribution to growth in these nations and whether or not 'spillovers' are generated by this investments. Also covered are effects of policy intervention by governments on FDI flows and whether non-economic factors (e.g. cultural factors) might figure as determinants of location of FDI.