Foreign Direct Investment and Development: Launching a Second Generation of Policy Research

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.

Theodore H. Moran, nonresident senior fellow, has been associated with the Peterson Institute since 1998. He holds the Marcus Wallenberg Chair at the School of Foreign Service in Georgetown University. He is the founder of the Landegger Program in International Business Diplomacy at the university and serves as director there. He also serves as a member of Huawei's International Advisory Council. From 2007 to 2013 he served as Associate to the US National Intelligence Council on international business issues.