Developing countries, emerging economies and countries
in transition have come increasingly to see FDI as a
source of economic development and modernisation, income
growth and employment. Countries have liberalised their FDI
regimes and pursued other policies to attract investment.
They have addressed the issue of how best to pursue domestic
policies to maximise the benefits of foreign presence in the
domestic economy. The study Foreign Direct Investment for
Development attempts primarily to shed light on the second
issue, by focusing on the overall effect of FDI on macroeconomic
growth and other welfare-enhancing processes, and
on the channels through which these benefits take effect.
The overall benefits of FDI for developing country
economies are well documented. Given the appropriate
host-country policies and a basic level of development, a
preponderance of studies shows that FDI triggers technology
spillovers, assists human capital formation, contributes
to international trade integration, helps create a more competitive
business environment and enhances enterprise
development. All of these contribute to higher economic
growth, which is the most potent tool for alleviating poverty
in developing countries. Moreover, beyond the strictly economic
benefits, FDI may help improve environmental and
social conditions in the host country by, for example, transferring
“cleaner” technologies and leading to more socially
responsible corporate policies.