Impacts of FDI in Developing Economies: A Survey of Theory and Evidence

Abstract

The impacts of foreign direct investment (FDI) toward the economic development of host developing economies have been intensively studied in the past two decades. After confirming the influences of economic globalization on international trade and investment of developing economies, this paper highlight the complexity of FDI patterns as well as the mixed impacts of FDI in the host economies. In this sense, this study suggests that a comprehensive explanation on the impacts of FDI in developing economies should not rely on one theoretical approach, but rather on a combination of approaches, which is a source for future studies. Furthermore, it will be beneficial to focus the analysis on a single host economy, either as a whole or at the sectoral basis. This study also concludes with some policy implications.