Though policies such as fiscal and financial incentives can be very effective in attracting
foreign investment, local conditions can limit the potential benefits FDI can convey to the
host country not generating benefits that go beyond the “capital” FDI brings and the wages
it generates. In this paper, in particular, we focused on the role of local financial markets,
and the link between foreign direct investment and growth. We believe that the development
of local financial markets in particular can adversely limit the economy’s ability of taking
advantage of such potential FDI benefits.