Foreign Direct Investment and its Role in Economic Development: Do We Need a New Agenda?

Abstract

Despite globalisation, the essential role of foreign direct investment (FDI) in economic development has not changed. However, many mechanisms and dynamics of FDI-assisted development have changed: there is greater variation in the kinds of FDI, the benefits each offers, and the manner in which each interacts with the host economy. This introductory article attempts to place the discussions and issues raised in this special issue of The European Journal of Development Research within the wider literature on FDI and development. The articles here analyse the role of multinational enterprises (MNEs) in industrial development in a ‘learning system’ perspective. They also analyse the policy tools available for using FDI for economic development in a liberalising, post-World Trade Organisation world, and the constraints to doing this. While this is a nascent debate, this special issue points to a variety of ‘soft’ policy options that provide a pragmatic response to the complexities of globalisation.

Malgré la mondialisation, le rôle essentiel des investissements directs étrangers (IDE) pour le développement économique n'a pas changé. Cependant, de nombreux mécanismes et la dynamique du développement basé sur les IDE ont, eux, bien changé: les types d'IDE sont plus variés, de même les bénéfices offerts par chacun et la manière dont chaque type interagit avec l'économie locale. Cet article d'introduction tente de placer les discussions et les thèmes soulevés dans ce numéro spécial du European Journal of Development Research dans le contexte de la littérature sur les investissements directs étrangers et le développement. Les articles analysent l'importance des entreprises multinationales (EMN) pour le développement industriel à partir d'une perspective de «système d'apprentissage». Ils analysent également les instruments politiques qui, dans un monde de plus en plus libéralisé et «post-Organisation Mondiale du Commerce», pourraient servir à utiliser les IDE dans le sens du développement économique; les contraintes existantes sont également relevées. Alors qu'il s'agit d'un débat naissant, ce numéro spécial relève un nombre d'options politiques modérées qui donnent une réponse pragmatique aux complexités de la mondialisation.

Notes

Sanjaya Lall is at the International Development Centre, University of Oxford, UK and Rajneesh Narula is at the Department of Economics, University of Reading Business School, UK. Earlier drafts of the articles included in this special issue were presented at a workshop organised by The Centre for Technology, Innovation and Culture (TIK) at the University of Oslo, Understanding FDI-Assisted Economic Development, from 22 to 25 May 2003. Sanjaya Lall and Rajneesh Narula gratefully acknowledge financial support from two Norwegian Research Council-funded projects, ‘The North Versus the South in a Globalising World’ and ‘Globalisation as a Transformative Force’. They gratefully acknowledge the support of Helge Hveem, Brian Portelli and Christine Sole in organisational matters. This article has benefited greatly from comments and discussions of the various participants. Comments on an earlier draft by Brian Portelli, Tanja Sinozic and Paola Criscuolo have also contributed to this article.

1. These have been referred to as innovation systems [see e.g., Lundvall, 1992 ; Edquist, 1997] or learning systems [Lall, 1992 ; Viotti, 2002].

Additional information

Notes on contributors

Rajneesh Narula

Sanjaya Lall is at the International Development Centre, University of Oxford, UK and Rajneesh Narula is at the Department of Economics, University of Reading Business School, UK. Earlier drafts of the articles included in this special issue were presented at a workshop organised by The Centre for Technology, Innovation and Culture (TIK) at the University of Oslo, Understanding FDI-Assisted Economic Development, from 22 to 25 May 2003. Sanjaya Lall and Rajneesh Narula gratefully acknowledge financial support from two Norwegian Research Council-funded projects, ‘The North Versus the South in a Globalising World’ and ‘Globalisation as a Transformative Force’. They gratefully acknowledge the support of Helge Hveem, Brian Portelli and Christine Sole in organisational matters. This article has benefited greatly from comments and discussions of the various participants. Comments on an earlier draft by Brian Portelli, Tanja Sinozic and Paola Criscuolo have also contributed to this article.