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</td><td colspan="4"><p>A. FDI Distribution (%) </p></td><td colspan="4"><p>B. Per Capita FDI (US$) </p></td></tr><tr><td colspan="2"><p>1980s </p></td><td colspan="2"><p>1990s </p></td><td colspan="2"><p>1980s </p></td><td colspan="2"><p>1990s </p></td></tr><tr><td><p>Early </p></td><td><p>Late </p></td><td><p>Early </p></td><td><p>Late </p></td><td><p>Early </p></td><td><p>Late </p></td><td><p>Early </p></td><td><p>Late </p></td></tr><tr><td><p>AFR </p></td><td><p>6.0 </p></td><td><p>8.8 </p></td><td><p>4.0 </p></td><td><p>3.9 </p></td><td><p>2.7 </p></td><td><p>2.9 </p></td><td><p>4.2 </p></td><td><p>10.6 </p></td></tr><tr><td><p>EAP </p></td><td><p>15.3 </p></td><td><p>40.2 </p></td><td><p>48.7 </p></td><td><p>37.3 </p></td><td><p>1.8 </p></td><td><p>4.0 </p></td><td><p>17.8 </p></td><td><p>34.2 </p></td></tr><tr><td><p>ECA </p></td><td><p>0.1 </p></td><td><p>0.6 </p></td><td><p>8.6 </p></td><td><p>13.2 </p></td><td><p>0.1 </p></td><td><p>0.3 </p></td><td><p>12.6 </p></td><td><p>54.8 </p></td></tr><tr><td><p>LAC </p></td><td><p>35.4 </p></td><td><p>38.2 </p></td><td><p>29.8 </p></td><td><p>39.8 </p></td><td><p>16.9 </p></td><td><p>14.1 </p></td><td><p>38.4 </p></td><td><p>137.5 </p></td></tr><tr><td><p>MENA </p></td><td><p>42.5 </p></td><td><p>10.1 </p></td><td><p>7.4 </p></td><td><p>3.5 </p></td><td><p>32.5 </p></td><td><p>5.7 </p></td><td><p>12.7 </p></td><td><p>16.8 </p></td></tr><tr><td><p>SAR </p></td><td><p>0.6 </p></td><td><p>2.1 </p></td><td><p>1.5 </p></td><td><p>2.3 </p></td><td><p>0.1 </p></td><td><p>0.3 </p></td><td><p>0.8 </p></td><td><p>2.9 </p></td></tr></tbody></table> <p>Source: World Bank, Global Development Finance, 2002. </p> <p>4. Such an overall picture changes once again when the sizes of the regions are taken into account. On a per capita basis, the achievements of Latin American and Caribbean countries over-shadow those of all other countries, while the performance of countries in South Asia, though improving, still lags far behind. (Table 2B.) </p> <p>2 </p> <p>1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 </p> <p>2001e </p> <p>5. What these basic facts tell us is that more than any other economic forces, FDI is driving the process of globalization by creating an increasingly tighter global production network. However, there are great discrepancies in the extent to which countries take part in this network. Not only significant gaps exist between developed and developing countries and among the different regions of the developing world, large and increasing disparities prevail even within the same region. (Table 3.) This phenomenon leads us to many questions: What are the roles of FDI in economic development? What determines the size and location of FDI flows? And what the states can do to reap the benefits of FDI while avoiding its negative impacts in this globalized world? </p> <p>Table 3: Standard Deviations in FDI Flows within Each Region (US$ millions) </p> <p>Source: IMF International Financial Statistics, 2002. </p> <p>6. This paper attempts to provide some insight to these questions through a brief review of the existing evidence on FDI. The role of FDI in economic development is the center of the discussion and is analyzed in depth in the next section. Both its positive and negative impacts are examined, as well as the channels through which FDI interacts with local economies. The paper then reviews the vast empirical evidence on the determinants of FDI flows, which provides guidance on the pre-conditions that the states need to create to draw out the positive forces of FDI and to prevent its negative effects from harming their economies. </p> <p>II. The role of FDI in Economic Development </p> <p>7. Economic development is an all-encompassing concept. It centers on economic and social progress, but also entails many different aspects that are not easily quantified, such as political freedom, social justice, and environmental soundness.1Without a doubt, all these matters combine to contribute to an overall high standard of living. However, empirical evidence has amply demonstrated that all these varied elements of economic development correlate with economic growth. That is, as a general rule, countries with faster economic growth have more rapid improvement in health and education outcomes, progressively freer political system, increasingly more equitable distribution of wealth, and enhanced capacity for environmental management. Therefore, while economic growth does not bring about automatically other aspects of social, institutional and </p> <p>1The United Nation Charter of 1944. </p> <table><tbody><tr><td> </td><td><p>1980 </p></td><td><p>1985 </p></td><td><p>1990 </p></td><td><p>1995 </p></td><td><p>2000 </p></td></tr><tr><td><p>AFR </p></td><td><p>304 </p></td><td><p>302 </p></td><td><p>301 </p></td><td><p>366 </p></td><td><p>318 </p></td></tr><tr><td><p>EAP </p></td><td><p>214 </p></td><td><p>392 </p></td><td><p>1,014 </p></td><td><p>7,934 </p></td><td><p>9,010 </p></td></tr><tr><td><p>ECA </p></td><td><p>- </p></td><td><p>- </p></td><td><p>68 </p></td><td><p>1,120 </p></td><td><p>1,960 </p></td></tr><tr><td><p>LAC </p></td><td><p>485 </p></td><td><p>463 </p></td><td><p>555 </p></td><td><p>1,919 </p></td><td><p>6,329 </p></td></tr><tr><td><p>MENA </p></td><td><p>725 </p></td><td><p>258 </p></td><td><p>446 </p></td><td><p>544 </p></td><td><p>661 </p></td></tr><tr><td><p>SAR </p></td><td><p>26 </p></td><td><p>47 </p></td><td><p>95 </p></td><td><p>760 </p></td><td><p>790 </p></td></tr></tbody></table> <p>3 </p> <p>environmental improvements, without economic growth, there is limited prospects for such achievements. </p> <p>8. In this context, the paper examines the role of FDI in economic development as a key ingredient for successful and sustainable economic XXXXXX XXX as part of a XXXXXXXXX to XXXXXX XXXXXXXXXXX. XXXX XXXXXXX XX XXX paper XXXX to highlight the most XXXXXXXXX channels XXXXXXX XXXXX FDI makes a XXXXXXXXXXX and XXXXXXXXXXXXX XXXXXX on the XXXXXXXX XXXXXXXXXXX of the host countries. At XXX same XXXX, it is XXXXXXXXX XX recognize that, XXXX XXX XXXXXX, FDI is XXX XXX XXXX no bad. A separate XXXXXXXXXX is devoted to XXX potential negative XXXXXXX of XXX flows XX XXXX economies. </p> <p>X. An XXXXXXX XX Economic XXXXXX </p> <p>X. The potential XXX fast income XXXXXX has XXXXXXXX drastically XXXX XXXX. XXXXXX the industrial XXXXXXXXXX, it took XXXXXXXX countries XXXX XXX years XXX XXXXXX XXX capita XX double. As the industrial revolution XXXXXXXXXXX in XXX XXXXXXXXXXX, XXXXXXX, XXX lead country, was able to double XXX per capita income in just over 60 years. XXXXX XXX World War II and XXXXXXXXXX towards the XXX of the twentieth XXXXXXX, many developing countries, such as Japan, XXXXXXXX, XXXXX, Ireland, XXX the high XXXXXXXXXX East Asian economies, managed to XXXXXX XXX capita income in less XXXX 10 XXXXX. (XXXXX X.) For the XXXXX time in XXXXXXX, it XX now possible for a XXXX person XXXX an under-developed XXXXXXX to XXXX from poverty XX a reasonably XXXXXXXXXXX life within a XXXXXX life span. </p> <p>Table 4: Time Needed XX XXXXXX Income </p> <p>XXXXXX: XXXXXX (2000). </p> <p>XX. XXXX what XX it XXXX makes such rapid progress possible? XXXXXXXX XXXXXXX XXXXX XXXX XXXXXXXXX explanations. XXXXXXXXX to one XXXXXX growth XXXXXX, long XXXX XXXXXXXX growth XXX XX explained XX the XXXXXXXXXXX XX XXXXXX in its sources, i.e. the increases in XXXXXX inputs (capital XXX labor ) XXX in XXXXX XXXXXX XXXXXXXXXXXX (TFP), which reflects XXXXXXXXXXXXX XXXXXXXX XXX XXXXX XXXXXXXXXX improvements in resource XXXXXXXXXXX.2In XXXX “endogenous” growth framework, FDI has XXXXX its XXXXXXX XX XXXXXXXXXX XXXXXXXXXXXXX XX all three XXXXXXXXXX of growth: FDI increases capital XXXXX, boosts XXXXX capital XXXXXXXXXXXX (though usually XXXXXXXXXX in labor stock), XXX XXXXXX up XXXXXXXXXXXXX advances in host XXXXXXXXX. XXXXXXXXXXXX, the most direct XXXXXXX XX XXX XX XXXX economies XXX through its XXXX in XXX XXXXXXXXXXXX of investment </p> <p>XXXXX details on growth XXXXXXXXXX XXXXXX XXX XX found in XXXXXXXX, X. (XXXX), “Growth XXX XXXXXXXX in advanced XXXXXXXXXX XXXXXXXXX: techniques XX XXXXXXXXXXXX assessment,”XXXXXXX XX XXXXXXXX Literature, XXX. 25; and Barro, X.J. (1998) “Notes XX XXXXXX XXXXXXXXXX,” XXXX XXXXXXX XXXXX No. XXXX. </p> <table><tbody><tr><td><p>Pre-XXXXXXXXXX XXXXXXXXXX </p></td><td><p>XXX years </p></td></tr><tr><td><p>XXXXXXX, XXX XXXXXXXXXX Revolution </p></td><td><p>175 years </p></td></tr><tr><td><p>Britain, mid 19thCentury </p></td><td><p>65 years </p></td></tr><tr><td><p>Fast developers, XXXX XXXXX XXX II </p></td><td><p>XX years or XXXX </p></td></tr></tbody></table> <p>4 </p> <p>capital and XXX growth of XXX of XXX XXXXXXXXXX. XXXXX two impacts XXX discussed XXXXXXXXXX below. </p> <p>1. FDI XXX Capital Formation </p> <p>11. From the XXXXXX Age investment XXXX after XXXXX War XX to the East Asian XXXXXXXX XXXXXXXX in the XXXXX, there XX ample XXXXXXXX XX demonstrate that XXXXXXXXXX XX a XXX ingredient XX XXXXXXXXX XXXXXX. Over the last two decades in particular, FDI has come to play a growing role in XXXX XXXXXXXXXX countries’ total investment. (Figure 3.) XXXXXXX, striking as the XXXX in XXX importance of FDI may seem in XXXX countries’ resource flows, FDI XX only XXXX of XXX total XXXXXXXXX by foreign investors in host countries. XX the same time that foreign companies mobilize XXXXXXXXX within their own corporate systems, XXXXX affiliates can also raise XXXXX through XXXXX, XXXXX, and XXXXXX XXXXXXXXX. To the extent XXXX XXXXX sources are in the XXXXXXXXXXXXX XXXXXXX markets, they XXXXXXXX the XXXXX inflows of XXXXXXX financial XXXXXXXXX for development. XXXXXX, as XXXX for XXXXXX States transnational corporations XXXXXXX, the flows of external resources to host countries XXX to the presence XX foreign XXXXXXXXXXX XXXXX XXXXXX FDI XXXXX alone.3 </p> <p>Figure X: XXXXX XX FDI XX XXXXX Fixed XXXXXXX XXXXXXXXX (%) </p> <p>XX 16 14 12 10 </p> <p>8 X 4 2 0 </p> <p>AFR XXX </p> <p>XXX XXX MENA SAR </p> <p>Early 1980s Late 1980s XXXXX XXXXX XXXX XXXXX </p> <p>XXXXXX : World Bank, World Development XXXXXX, XXXX. </p> <p>XX. Meanwhile, because transnational corporations typically XXXX access XX a XXXX variety XX financing XXXXXXX, XXX XXXX-XXXXXXXX cost XX XXXXXXX is XXXXXXX XXXXX XXX XXXX XXXX the domestic XXXXX from XXXXXXXXXX countries. XXXX advantage enables XXXX to XX more XXXXXXXXXX than other XXXXX XX investment XXXXXXXXXXXXX XXX incentives. </p> <p>3UNCTAD, XXXXX XXXXXXXXXX XXXXXX, XXXX. </p> <p>X </p> <p>XXXXXXXXXXXX, XXXX XXX XXXXXXXXX XXXXXXXX XXX which XXXXXXXX investors XX not have the capacities to assume or XXXXX are XXXXXXXXXX XXX XXXXX for host XXXXXXX firms. XX such, XXXX XXXXXXX XXX XXXXXXXXXX frontiers in XXXX countries. XXXX time, conditions XXXXXXXXX to XXXXXXXX XXXXXXXXX XXX be established in XXXXXXXXXX that are beyond XXXXX current reach. XX XXXX cases, FDI also serves XX stimulate XXXXXXXX investment, whereby XXXXXX XXX XXXXX XXXX country investment further. Empirical XXXXXXX lend XXXXXXX XX such “XXXXXXXX in” XXXXXXX of FDI. In XXXXXXXXXXX et al (1995), for example, it was estimated that XXX total increase in investment XXX between 1.X and 2.X times the increase in the XXXXX of XXX.4 </p> <p>XX. XXXX importantly, FDI XXX XXXX adds to external XXXXXXXXX XXXXXXXXX XXX XXXX country XXXXXXXXXXX, it XX also more XXXXXX than other forms XX financing. Typically, FDI is based on a long-XXXX XXXX of the market, the growth XXXXXXXXX and the structural XXXXXXXXXXXXXXX XX the recipient XXXXXXXXX. It is thus less prone to reversals in adverse XXXXXXXXXX XXXX bank XXXXXXX or XXXXXXXXX XXXXX. This XXXXXXX of XXX is clearly evident XXXX Figure 4, which compares XXX coefficient XX XXXXXXXXXX (XXX XXXXXX the value, XXX XXXX volatile the resource XXXXX) XX FDI with XXXX XX portfolio XXXXXXXXXXX and XXXXX XXXXX XX private financial flows (XXXXXX debt) XX developing countries between XXXX- 2000. </p> <p>XXXXXX X: XXXXXXXXXX of Capital XXXXX in XXXXXXXXXX Countries </p> <p>X.0 X.0 X.X 4.0 X.0 X.X X.0 0.X </p> <p>1980s XXXXX 1980s XXX XXX XXX </p> <p>XXXXX XXXXX </p> <p>1990s 1980s LAC MENA XXX </p> <p>XXXXX 1980s </p> <p>XXXXX </p> <p>1980s 1990s </p> <p>XXX XXXXXXXXX XXXXX </p> <p>XXXXXX: World XXXX, Global Development XXXXXXX, XXXX. </p> <p>XX. Clearly, XXX XX a much more stable XXXX of XXXXXXXX financing than all XXXXX XXXXX XX financial XXXXX. XXX of XXX XXX countries for XXXXX data XXX available, only 27 countries experienced XXXX XXXXXXXXXX in their XXX XXXXXXX XXXX XXXXX XXXXX XX external </p> <p>XXXXXXXXXXXX, E. XXX J. W. XXX (1995), “XXX does XXXXXXX direct investment affect XXXXXXXX XXXXXX?” XXXX XXXXXXX XXXXX No. XXXX. </p> <p>6 </p> <p>private XXXXXXXXX during the 1980s, XXX this number XXX XXXXXXX XX XX in the XXXX turbulent XXXXX. More recent XXXX XXXXXXX confirm the resilience XX FDI XXXXX: XXXXXX continues XX XXXXXX large volumes XX XXX in XXX first XXXX of this XXXX – it XX the XXXXXX X XXXXXXXXX of XXX XXXXX XXX developing XXXXXXXXX (XXXXX China) - XXXXXXX the XXXXXXX downturn in XXXX XXXXXXX. </p> <p>XX. XXXXXXX, XXXX XXXXXX FDI XXX XXXX a debt-XXXXXXXX component, it XX XXXXXXXXXXX equity investment.XXXXXXXX XXX XXXXXXXXXXX XXXX XXXX a XXXXXXX yields return XXX part of the XXXXXXX XX routinely reinvested in XXX XXXX XXXXXXX. XX XXXX, XXXX XX XXX XXXXX XXX XXXX by the XXXXXXXXXXXX XX XXX XXXXXXX companies. XXXX XXX marked advantage XXXX XXXX XXXXXXX, XXXXX must be repaid with fixed interest XXXXXXXXXX of the performance XX XXX XXXXXXX for XXXXX XXX XXXX XXX used. Moreover, XXXXXXXXX often look XXXXXXX taxpayers XX hold XXXX XXXXXXXX when XXXXXXXX fail. This is XXXXXXXXXX XXXX in XXXXX of XXXXXXXX XXXXXXXXX XXXXXX, XXXX government bail-XXXX are XXXXXXXXX sought and XXXXXXXX XX XXX banks, adding to XXX XXX burdens of XXXX XXXXXXX taxpayers. Therefore, FDI will by XXXXXXXXXX XXX lead XX a XXXX crisis XXX debt relief XXXX never be an XXXXX. </p> <p>2. FDI and XXXXXXXXXXXX XXXXXX </p> <p>16. In XXXXXXXXXXX XXXXXXXX XXXXXXXX, XXXXXXXXXXXX XXXXXX XXXXXXXX the contribution XX XXXXXXXXX XXXXXXXXXXXXX changes XX XXXXXXXX XXXXXX. However, new understandings XX XXX XXXXXX XXXXXXX, XXXXXXXXXX XXXX XXX XXXXXX XX XXX XXXXXXXXXX XXXXXX XXXXXX, call XXX caution in XXXX an XXXXXXXXXXXXXX. Depending on XXX nature of XXX XXXXXXXXXX (labor or XXXXXXX saving), the structure of XXX economy, XXX the ease XX substitution XXXXXXX factors XX XXXXXXXXXX, technological change XXX XX either XXXX or less than TFP XXXXXX. At the XXXX XXXX, the importance XX XXX “XXXX” XXXX of technological advance – XXXXXXXXXXXXXX XXXXXXXXX, managerial XXXXXXXXX, tacit knowledge, etc. – XX XXXXXXXXXXXX XXXXXXXXXX as an integral XXXX XX the whole XXXXXXXXXXXXX XXXXXXX XXXXXXX, XXXXXXXXXXXX to the XXXXXXX XXXXXXXXXXXX XXXXXX. </p> <p>XX. Whatever XXX XXXXXXX level of XXXXXXXXXXXX XX economic XXXXXX, the XXXXXXXXXX XX XXXXXXXXXXXXX and organizational advance XXX long been firmly established. XX the long XXX-XXXXXXXXXX XXXXXXXXXX XXXXXX, a XXXX term XXXXXX rate of 0.X XXXXXXX per year was XXXXXXXXXX remarkable. The XXXXXXXXXXXXX breakthrough in XXXX 18thcentury Britain XXXXXXX XXX XXXXXX XXXXXXXXX, but it XXX XXXXX lackluster XXXXXXXX to XXX X percent annual XXXXXX seen in XXX high performing XXXX Asian XXXXXXXXX in recent XXXXXXX. Just XXXX the XXXX XXXXXX in postwar XXXXXX, such rapid economic growth XX XXX developing XXXXXXXXX in XXX XXXXXX XXXX XX XXX XXXXXXXXXXX owed much to XXX reduction in barriers to XXX emulation XX technical XXX XXXXXXXXXXXXXX innovations from the XXXXX’s XXXXXXX XXXXXXXXX. XXXXXX, rather XXXX re-inventing XXXX XXX already existed elsewhere, those XXXXXXXXXX countries XXXX XXXX able XX import and XXXXXXX XXX best practice XXXX XXXX advanced economies XXXXXXX XXXXXXXXXXXXX economic growth. For developing world at large, XXX </p> <p>5The debt-XXXXXXXX XXXXXXXXX XX FDI accounts for XXXX than 18 XXXXXXX of XXX inflows of FDI to XXXXXXXXXX countries XXXXXXX 1990-XXXX. UNCTAD, XXXXX Investment Report, XXXX. </p> <p>7 </p> <p>rapid and XXXXXXXXX XXXXXXXX and XXXXXXXX of “XXXX XXXXXXXX” across XXXXXXX XXXXXXX the very XXXXXXX XX XXXXXXXX development. </p> <p>18. Best practice XXX be XXXXXXXXXXX across borders by XXXXXXX mechanisms. XXXXXXX buyers of exports may provide XXX XXXXXX XXX upgrading, XX XXXX as XXXX XXXXX of technical assistance to domestic XXXXX. XXXXXXXX capital XXXXX XXX XXXXXX improved XXXXXXXXXX. XXXXXXXXXX XXXXXXXXX XXXXXX countries to acquire innovations. Expatriates transmit knowledge. Yet, XXXXXXXX XXX most XXXXXXXXX XXXXX XX transferring XXXX XXXXXXXX XX XXX XX XXXXXXX XXXXXXXXXX XXXXX to package and XXXXXXXXX elements from XXX XX the XXXXX mechanisms.6In XXXX, the most XXXXXXXXX XXXXXXX XX XXX XX that it XXXXXXXX, XXXXX with XXXXXXXXX XXXXXXXXX, access to the XXXXX XXXXX of XXXXXXXXXXXXX, organizational XXX XXXXX assets, as XXXX as the XXXXXXX of the parent XXXXXXX. With XXX exceptions, the vast XXXXXXXX XX the fast-XXXXXXX XXXXXXXXX relied heavily XX FDI XX XXXX start XXX XXXXXXX their XXXXX economic XXXXXXXXXXXXXX.X </p> <p>XX. XXX transmits XXXX practice in XXX ways: XXXXXXXX XXXXXXXXX of technology XXX XXXXXX to XXX XXXXXXX affiliates in XXX XXXX XXXXXXX, and XXXXXXXXXXXXX diffusion to a broad XXXXXXX XX XXXXXXXXX XXX institutions within XXX host country. XXXXXXXX XXX XXXXXXXX XXXXXXXXX XX XXXX XXXXXXXX XXXXXXX XXXXXXXXXXX the affiliates, XX the XXXXXX that foreign-XXXXX firms XXXXXXXXXX domestic XXXXXXXXXXXX, their presence still XXXXXXXXXXX a XXXXXXXX XXXXX to the XXXX XXXXXXX.8First XX all, many of XXX technologies XXX XXXXX on expensive R&D integral XX XXXXXXX products that XXXXX generally XXXX not XXXX XX unrelated parties. Direct XXXXXXXXXXX XXX XXXX the XXXX mechanism XXX XXX host XXXXXXX XX XXXXXX XXX XXXXXX XXXXXXXXXXXX and XXXXXX its XXXXXXXXXX base. XXXXXXXX, because XXXXXXX affiliates are XXXXXXXXX XX XXX XXXXXXXXX to XXXXXXXXX new XXXXXXXXXX XXX XXXXXXXXXXXXXX XXXXXXXXXX, XXXXXXX control standards, and XXXXXXXXX methods, XXXX tend XX absorb best practice more XXXXXXX XXXX XXXXX XXXXX. Thanks XX their lower XXXXXXXX failures, XXX affiliates XXX serve as a XXXX XXXXXX of these XXX XXXXXXXXXX in the XXXX country. XXXXXXX, XXX XXXX XXXXXXXXXX countries, XXXXX XXXXXXXXXXXX into a XXXXXX company’s XXXXXXXXXXXXX XXXXXXXXXX network XX XXX XXXXXXX way for them to gain XXXXXX XX regional or global markets. </p> <p>XX. XXXXXXXXXXXX, the ultimate XXXXXX XX XXX XX domestic XXXXXXXX growth depends XX the XXXXXXXXX of best practice XXXXXXX XXX local XXXXXXX at XXXXX. XXXX XXXXXXXXX XXXXXXX takes XXXXX XXXXXXX XXXX XXXX XXXXXXXX: backward XXXXXXXX with XXXXX XXXXXXXXX (XXXXXXXX), forward linkages with local XXXXXXXXX XXX distributors, XXXXXXXXXX linkages </p> <p>6Klein, X., C. XXXXX, and B. Hadjimichael (2001), “Foreign XXXXXX investment XXX XXXXXXX XXXXXXXXX,” XXXXXX Research XXXXXXX XXXXX No. 2613, XXX World Bank. 7Japan XXX XXXXX XXX XXXXXXXXXXX XXX only XXXXXXXX of XXXXXXXXX which XXXXXXXX rapid XXXXXX with XXXXXXX reliance on XXX. This XXXXXXXX XX very XXXXXXXXX to replicate, especially in countries without a solid skill XXXX, a XXXXXXX entrepreneurial XXXXXX, a XXXXXXX XXXXXXXXXXX, and conducive XXXXXXXXX regimes. </p> <p>XXXXX studies show that foreign ownership positively XXXXXXXXXX XXXX productivity increases of the firm. XXX XXXXXXXXXXXX, V. XXX M. X. Shah (XXXX), “XXX effects XX foreign XXXXXXXXX in Africa: evidence from Ghana, XXXXX XXX XXXXXXXX,” XXXX Paper No. 81, XXX XXXXX Bank.; XXXXXXX, S. XXX X. XXXXXXX (1998), “Foreign investment and productivity growth in Czech enterprises,” Policy XXXXXXXX XXXXXXX XXXXX XXXX, The XXXXX Bank.; and Aitken, X. XXX X. X. Harrison (XXXX), XX domestic XXXXX XXXXXXX XXXX XXXXXX XXXXXXX investment? XXXXXXXX XXXX Venezuela,”XXX XXXXXXXX Economic XXXXXX, Vol. 89, No. 3. </p> <p>X </p> <p>with XXXXX competitors, XXX XXXXXXXX XXXX local XXXXXXXXXXXX such XX universities and XXXXXXXX institutes XX well XX vocational training centers. To XXXXXXXXXX XXXXXXXXX, the most important channel of these is XXXXXXX sourcing: the XXXXXXXX XX XXXXXX XXX services from XXXXX XXXXXXX XX foreign XXXXXXXXX. </p> <p>XX. XXX things (XXXX, quality, XXXXXXXXXXX, XXX.) XXXXX equal, local procurement is XXXXXXXXX XXXXXXXXX than XXX’s XXXXXX XXXXXXXXX or in-XXXXX XXXXXXXXXX because proximity lowers XXXXXXXXXXX XXXXX and allows XXX greater XXXXXXXXXXX and specialization. XXXX XX why XXXXXXXX the XXXXX XX XXXXX so are lower than XXX resulting XXXXXXX, foreign investors have an interest in developing local XXXXXXXXX, XXXXXXX them set XX XXXXXXXXXX, raise technological and XXXXX levels, XXXXXX XXXXXX, XXX expand markets. XX XXX XXXX XXXXXXX, XXXX is often one XX the most XXXXXXXX mechanism XXX XXXXXXXXXXXX of best practice. XXX XXXXXXXXXXXXX of these XXXXXXXXX can in turn lead XX XXXXXXX XXXXXXX XXXXXXXXXX XX XXX XXXX XX XXX XXXXXXX XXXXXXX demonstration effects, XXXXXXXX of trained labor, XXXXXXXXXX spin- offs, and competition XXXXXXX. </p> <p>22. The XXXXXX XX XXXXX XXXXXXX XXXXXXXXXX establish backward XXXXXXXX with XXXXX XXXXXXXXX varies XXXX XXXXXXXX to XXXXXXXX XXX XXXXXXX XX country. XXXXXXXX XXXXX XX widespread XXXXXXX in developing XXXXXXXXX XXXX foreign XXXXXXXXXX XXXX too limited connection XXXX XXX XXXX of the XXXX economy, several empirical XXXXXXX have demonstrated that in some industries (e.g. automobile) and in XXXXXXXXX XXXXX XXXXXXXX XXXXXXXX XXXXXXXXXX XXX present, XXXXXXX XXXXXXXXX XXXX XXXXXXXXX efforts XX XXXXXXX prospective XXXXXXXXX and relied XXXX XXXX heavily XX local suppliers than domestic firms.9 </p> <p>23. XXXXXXXXXX, XXX diffusion of best XXXXXXXX in the XXXX XXXXXXX depends on the way XXXXXXXX XXXXXXX work, XX XXXX XX XXX XXXXXXXXXX capacities of domestic firms. Where the market incentive structures are XXXXXXXX XXXXXXXXX, FDI inflows XXXX XXXX to be more XXXXXXXXXX and rent-seeking in nature, XXXXXXXX limited benefits to XXX XXXX XXXXXXX. Similarly, when the XXXXXXXX XXXXXXXXX base is thin XXX information XX asymmetric, XXX diffusion XXXXXXXX XXXX XX XXXXXXXXXXX XXX transferring best practice. </p> <p>B. X Mechanism for Social Advancement </p> <p>XX. XX the XXXX time XXXX FDI XXXXXX as a catalyst for XXXXX economic XXXXXX by XXXXXXXX developing XXXXXXXXX to leapfrog developmental stages XXX to catch up XXXX XXXXXXXX economies, it XXXXXXXXXXX also an important advocate XXX improved XXXXXX norms. In this respect, FDI plays a major XXXX in the XXXXXX XXXXXXXXXXX XXXXXX XX the host countries. Here, XXX XX the main XXXXXX aspects XX development – XXXXXXXXXX and XXXXXXXXXXX - are discussed in detail. </p> <p>9See examples in XXXX, S. (XXXX), “Vertical interfirm XXXXXXXX in XXXX: an XXXXXXXXX XXXXX,”Oxford Bulletin XX XXXXXXXXX XXX XXXXXXXXXX, Vol XX, No. 3. on XXXXX; UNCTAD (XXXX),World Investment XXXXXXXX Argentina, Brazil and XXXXXXXX; Batra X. and H. XXX (2000),Interfirm XXXXXXXX XXX XXXXXXXXXXXX XXXXXX: XXXXXXXX XXXX Malaysian manufacturing, XXX XXXXX Bank; and Barnes, J. and X. Kaplinsky (XXXX), “XXXXXXXXXXXXX XXX the XXXXX of XXXXX firms? Automobile component XXXXXXX in XXXXX Africa. </p> <p>X </p> <p>1. Employment and XXXXX Standard </p> <p>25. Increasing gainful XXX XXXXXX XXXXXXXXXX XXX always XXXXXX XXXX as a policy XXXXXXXXX XXX developing countries. XX is a principal XXXXX to achieve an XXXXXXXXX distribution of XXXXXX XXX XXXXXX XXXXXXXX of XXXXXXX XXX XXX XXXXXXXX of the XXXXXXXXXX. XXXXXXX XX XXX special features of XXXXXXX investments – they XXXX to be XXXXXX in size, XXXX greater technological sophistication, facing XXXX XXXXXXXXXXX XXXXXXXXX in their product XXXXXXX, XXX XXXXXX more XXXX XX XXXXXXXX in their XXXXXXXXXX XX XXXXXXXX XX XXXXXXXX enterprises – XXX XXXXX plays a XXXXXX XXXX in XXXXXXXXXX creation XXX upgrading XX XXX host countries. </p> <p>XX. There XXX three basic XXXXXXXXXX for FDI XX generate XXXXXXXXXX in XXX recipient XXXXXXXXX. XXXXX, foreign XXXXXXXXXX XXXXXX people in their XXXXXXXX XXXXXXXXXX. Second, XXXXXXX XXXXXXXX XXX XXXXXXX linkages, XXXXXXXXXX is created in XXXXXXXXXXX XXXX are XXXXXXXXX, XXXXXXXXXXXXXX, or XXXXXXX providers XX them. Third, XX FDI-XXXXXXX XXXXXXXXXX XXXXXX and the XXXXX economy XXXXX, XXXXXXXXXX is XXXX created in sectors XXX activities that XXX not even XXXXXXXXXX XXXXXX to the original XXX. </p> <p>XX. Comprehensive XXXX are absent XXXX XXXXXXX to the XXXXXXXXXX XXXXXXXXX XX XXX in developing countries. Estimates XXX XXX direct XXXXXXXXXX created by XXXXXXX affiliates at less than XXX XXXXXXX of XXX labor XXXXX in most developing countries, XXXXXXXX the XXXXX XXXXX XX XXXXXX when only formal employment XX considered XXX it is often XXXXXXXXXXX in the XXXXXX XXXXXXXXXXXXX sector.10In XXXXXXXX, for XXXXXXX, XXX accounts for about 17 percent XX the XXXXX XXXXXXXXXXXXX employment in XXX late XXXXX, XX XXXX as a XXXXXXX share XX XXX XXXXXXXXXX XXXXXXXXXX in XXX poorer XXXXXXXXX XXX XXXX XXXX XXXXXXX.11Indirect employment created XX XXXXXXX XXXXXXXXXX, XX XXXXXXXX, XXX XX large XXXXX XXX interaction XXXXXXX XXX XXX the XXXXX XXXXXXX XX XXXXXXX. Based on a series XX XXXXX case XXXXXXX in both XXXXXXXXX XXX XXXXXXXXXX XXXXXXXXX, XXX study estimated that when XXXX the XXXXXXXX employment generated XX XXXXXXXX XXX forward linkages XXX considered, X.X XXXX were created XXXXXXXXXX XXX each XXX created directly XX a XXXXXXX affiliate.12 </p> <p>28. XXXXX XXXXXXXXXXXXX XXXXXXXXXX XXXXXXXX XXXXX high in XXX XXXXXX XXXXXX XX XXXXXXXXXX countries, thequalityof XXX jobs XXXXXXX through XXX preoccupies XXX XXXXXX makers XXXX equal weight. Despite XXX popular XXXXXX XXXX XXXXXXX investors are XXXXXXXXX XX developing countries XXXXXXXXXXX, or even XXXXXX, by the XXX labor costs, XXXXXXXXX XXXXX to the opposite. XX fact, there is XXXXXXX XXXXXXXXX XXXX XXXXXXXXXXXXX companies provide employment on XXXXXXXXXX XXXX, XX the XXXXX, compare XXXXXXXXX with the XXXXXXXXXX </p> <p>10UNCTAD,World Investment XXXXXX, 1994. XXXXXXXXX, X. and X. Sherman (XXXX). “XXX XXXXXXX XXXXXXX of foreign XXXXXX investment XX XXXXXXXX development in XXXXXXXX: XXXXXXXXX responses.” XXXXX XXXXXXXX XXX High Level Roundtable XX FDI XXX XXX Impact XX Poverty Alleviation, December XXXX. XXXXXXX, X XXX X. Savary (1993). “Les effets XXXXXXXXX XXX entreprises XXXXXXXXXXXXXXX XXX l’XXXXXX des pays d’XXXXXXX. » XXX XXXXXXX XXXXX No. XX. </p> <p>XX </p> <p>XXXXXXXXX in XXXX XXXXXXXXX. In XXXXXXXXXX, XXXX-XXXXXXXXXXX large multinational XXXXXXXXXXX XXX most XXXXXX to comply with international labor XXXXXXXXX and employ good labor XXXXXXXXX. XXXXXX, because XX XXXXX size, XXXXXXXXXXXXX sophistication, XXX need to meet high product XXXXXXXXX, XXX exposure to international XXXXXXXX, XXXXXXX affiliates have come XX be expected XX XXXXX XXXXXX XXXXXXXXXXXX, XXXXXXXX working XXXXXXXXXX, and XXXX skill XXXXXXXXX opportunities to XXXXX workers XXXX domestic XXXXX. </p> <p>29. XX XXXXXXXX to XXXXXXXXXXXXX XXXXXXXXXX, best employment XXXXXXXXX can be transferred to XXXX XXXXXXXXX XXXX XXX foreign affiliates XXX well XXXXXXXXXX XXXX the local XXXXXXX. XX this respect, the XXXXX-border XXXXXXXXX XX modern organizational XXX XXXXXXXXXX XXXXXXXXXX XXX XXX XXXX XXXXXX XX XXX working conditions and XXXXX resource XXXXXXXXXXX styles of the XXXXXXXXX XXXXXXXXX. By creating a XXXX efficient XXX XXXX productive work XXXXXXX, XXX XXXXX XX XXX new employment norms and higher labor standards in the relevant XXXXXXXXXX XXX localities. XX China, XXX XXXXXXX, it XXX through XXXXXXX XXXXXXXXXXX XXXX a XXX form of labor-XXXXXXXX XXXXXX was XXXXX introduced in the early 1980s, which XXXXXX remuneration and XXXXXXX XX XXXXX XXXXXXXXXXXX. XXX new XXXXXX system was so successful that it eventually XXX to the country-XXXX XXXX XXX labor market reforms. </p> <p>XX. XXXXXXX, as XXXX XX XXX XXXXX-border XXXXXXXX XX its human XXXXXXXX XXXXXXXXXX XXXXXXXXX, FDI XXXX XXXXXX XXXX it XXX XXXX XX modern industrial relations XXXX are XXXXXXXXX in XXXXXXXX countries.13In general, foreign XXXXXXXXX XXXXX their industrial relations XXXXXXX to the legislations XXX practices XX XXXXX host countries. XX doing so, their approach to management-labor relations XX XXXXXXXXXX XX XXX XXXXXXXXX of XXX XXXX country XXXXXXXXXXX. XXX XXXXXX character of FDI, however, suggests that XXXXX foreign companies XXX pursue XXXXXXXXX that XXXXXX in some XXXXXXXX from those of indigenous XXXXXXXXXXX in a host XXXXXXX. Internationally, XXXXX XX a broad trend XXXXXXX XXXXXXXXX communication between management and workers. As multinational corporations XXX XXXXXXXXX XXXXX XXXX invest in their workforce XXX deal with workers’ XXXXXXXXXXXXX with a view towards establishing an effective XXXXXXXXXXXX, industrial XXXXXXXXX XXXXXXXXXXXX XX XXX arise more frequently in foreign XXXXXXXXXX XXXX in domestic firms. XXXXXXXXXX, to the XXXXXX that XXXXX XXXXX XXXXXXXXX are XXXX XXXXXXXXXXXX in XXXXXX XXXXX XX their XXXXXXXXXXXXX experiences, their pattern of industrial XXXXXXXXX often XXXXXXX a model XXX XXXXXXXX firms and XXXX XXXX XX the labor force XXXX XX XXX organized. </p> <p>2. XXXXXXXXXXXXX Standards </p> <p>31. The XXXXXXXXXXXXX degradation in developing XXXXXXXXX is XXX combined consequence of XXX production XXX consumption patterns XXXX XXXXXX the countries and in their XXXXXX markets. XX a XXXXXXXXXX XXXXX economy, the impact of XXXXX XXXXXX are amplified, with FDI serving XX XXXXXXX XXXXXXX. XXXXXXXXXXX, while it XX undeniable XXXX XXXXX XXXX been cases where XXXXXXXX companies relocate XXXXXXXXX XXXXXXXXXX to countries or regions out of considerations XX weak environmental XXXXXXXXX, XXXXX is no XXXXXXXXXX evidence XXXX this is XXX XXXX. Overall, XXX flows XX places XXXXX XXX net </p> <p>13This is XXXX XXXXXXXX XXX investors XXXX West European XXXXXXXXX. </p> <p>XX </p> <p>profitability XX highest, XXX where XXXXX XXX lowest. XXXX is XXX XXX XXXX most XX the world’s FDI XXXXX XX developed countries, XXXXX XXXXXX costs XXX higher XXX social XXXXXXXXX more XXXXXXXXX, XXXXXXXXX XXXX XXXX XXX United States show XXXX XXX XXXXX of XXXXXXXXX-XXXXXXXXX production XX the highest in developed XXXXXXXXX as well.XXXXXXXXXXX, XXXXX is XX XXXXXX XXXXXXXX to XXXXXXX the argument XXXX FDI XX XXXXXXX XXXXXXXX XX developing countries XX XXXXX XXXXX XXXXXXXXXXXXX standards so XX XXX to lose XXXXXXXXXX XXX XXXX. </p> <p>32. XXXXX have been XXXXXXX XXXXXXX that attempt to test XXX “pollution XXXXX” XXXXXXXXXX. Both XXX correlation approach, XXXXX XXXXXXXX XXX XXXXXXXXXXXX between XXXXXXX XXX XXX environmental XXXXXXXXX of host countries, XXX XXX location choice approach, which embeds environmental XXXXXXXXXX XX a XXXXXXXXXXXX for XXX flows, fail XX support XXXX hypothesis.15 XXXX in selected case XXXXXXX were XXXXXXXX XXXXX to XXXXXXX the notion that environmental XXXXXXXXX were a factor in XXX XXXXXXXX decisions. XXXXXXX, it XXXXXX be XXXXXXX out that XXXXX case XXXXXXX XXXXXX XXXX selection bias XXXXXXX only firms that have actually shifted location were XXXXXXXXXX.16 </p> <p>XX. Essentially, environmental resources XXX an input XXXX XXX production process. The impact XX industrial activities XX the environment XX XXXX closely linked XX the XXXXXXXXXX efficiency XX firms and their capacity to manage environmental risks. XXXXXXXXXXXXX damage tends to XX XXXXXXXX in XXX XXXXXXXXXXXX XXXXXXXXXX that XXXXXX obsolete technology, outdated XXXX methods, poor XXXXX resource XXXXXXXXXX XXXXXXXXXX, and XXXXXXXXXXX energy XXX. In XXXX XXXXXXX, XX account of XXX XXXXXXXX technological and management XXXX, FDI XX actually XXXXXX positioned XX XXXXXX XXXXXX environmental XXXXXXXXX XXXX their domestic XXXXXXXXXXXX. There XX XXXXXX XXXX XXXXXXXX XX show that XXX majority of foreign XXXXXXXXX XXXXXX behave worse than XX XXX general practice in the recipient XXXXXX. Rather, they XXXX to espouse XXXXXX XXXXXXXXXXXXX XXXXXXXXX and contribute to an XXXXXXXXXXX of XXXXX XXXXXXXXXXX.XX </p> <p>XX. XXXXXXXXX, instead XX being XXXXXX as a XXXXX for the “race XX the bottom” in XXXXXXXXXX countries’ effort to generate XXXXXX, FDI should be viewed XX a force to bring about XXXXXX XXXXXXXXXXXXX standards. XXXXXXX XX their XXXXXXXXXXX XX the developed XXXXX, XXXXX affluent and XXXXXXXXXXXXXXX demanding XXXXXXX call for XXXXXXXXX XXXXXXXXXXXXX regulations and XXXXXXXXXXX-friendly XXXXXXXX, XXX XXX become a XXXXXXX for XXXXXXXXXXXX XXXXX technology and sound XXXXXXXXXXXXX management systems. </p> <p>14UNCTAD,World XXXXXXXXXX XXXXXX, 1999. XXXXX Adams J. (XXXX), “Environmental policy XXX competitiveness in a globalized XXXXXXX: conceptual issues and a review of the XXXXXXXXX evidence”, in OECD XXXXXXXXXXXXX and XXXXXXXXXXX: Preliminary XXXXXXXXXXXX; and Eskeland G. XXX A. Harrison (1997), “XXXXXX to greener pastures? XXXXXXXXXXXXX XXX the XXXXXXXXX haven XXXXXXXXXX” The World XXXX, mimeo. 16UNCTAD XX. XXX. XXXXX Pearson, X. (XXXX),XXXXXXXXXXXXX corporations, XXX environment XXX the XXXXX XXXXX, North Carolina: Duke XXXXXXXXXX Press; XXXXXXX, D. (1998),Pollution and XXX XXXXXXXX XXX the world XXXXXXX, Cambridge: Cambridge XXXXXXXXXX Press; XXXXXX, B. (ed.), (XXXX),Private XXXXXXX flows XXX XXX environment: XXXXXXX from XXXXX America,Cheltenham: XXXXXX XXXXX XXXXXXXXXX; and XXXXXXX , X. (XXXX), “XXXXXX XX XXX XXXXXX? Foreign investment XXX XXX pollution in XXXXXXXXXX countries,” mimeo, XXX XXXXX XXXX. </p> <p>XX </p> <p>X. XXXXXXXXX Negative XXXXXXX XX FDI </p> <p>35. As XXXXXXXX in detail in XXX discussions above, FDI XXX a key role XX play in host XXXXXXXXX’ XXXXXXXX development. This does not XXXX, however, XXXX FDI can XXXXX XXXX XX XXXXXXXXXXX XXXXXXXX XXXXX XXX XXXXXXXXXXXXX. Indeed, even XXXX the best XX intentions, FDI XXX XXXXXXXXX produce XXXXXXXXXXXXX results XXXX are harmful to XXXX XXXXXXXXXX XXXXXXXXX. It XX also XXXXXXXXXX XXXX, XXXX XXXXXX they are, some foreign investments may be XXXXXXXXXX in nature XXX XXXX to be XXXXXXXX XXXXXXXXX. XXXX of the XXXXXXXX impacts XX FDI are reviewed in the XXXXXXXXX section. As will XX seen, in most XXXXX, these negative effects are a XXXXXXXX XX the XXXXXXXXXXX XXX inefficiencies in XXX XXXXXXXX markets. XXXXXXXXX, they are essentially XXXXXXXXX with XXXXXXXXXXX policy tools XXX a sound XXXXXXXXXX XXXXXXXXX. </p> <p>1. The “Crowding XXX” Effect of XXX </p> <p>36. XXXXXXXXXXXXXXX the XXXXXXXXX evidence that XXX XXXXXXX results in proportionally more XXXXXXXXXX XXXX what can XX counted for by FDI XXXXX, XXXXX XX the lingering XXXXXXX that XXXXXXX XXXXXXXXXXX may XXXX away XXX XXXXXXXXXX XXXXXXXXXXXXX of domestic XXXXX, XXXXXXX driving XXXX out of business. Such a situation XXX occur in either XXXXXXXXX markets or XXXXXXX markets. If the foreign investor finances XXX XXXXXXX by borrowing XXXX the host XXXXXXX financial market under XXXXXXXXXX XX scarce resources, XXXXXXXX XXXXXXXX rates XXX XXXX XX a result, XXXXX may make borrowing unaffordable for XXXX domestic XXXXX. XXXXXXXXX to XXXXXXX XXXX from XXXXXXXXX, XXXXX, a XXXXXXX with XXXXXXXXX XXXXXXX XXXXXXXX towards FDI, XXX XXXXXXXX the XXXXX XX XXXXX the access XX foreign companies to XXXXXXXX XXXXXXX XXXXXX. XXXX though the provision XXX never been XXXXXXX, its XXXX XXXXXXXXX testifies to the unease XXXXX XXXXX developing XXXXXXXXX XXXX XXXX potential XXXXXXXX.18 </p> <p>37. XX XXX XXXXXX XXX economy in activities in which competing domestic XXXXX XXXXXXX XXXXX, XXX may well reduce XXXXXXXX investments XXXX would have been undertaken by domestic XXXXXXXXX. Even in XXX activities XXXXXX the current XXXXX of XXXXXXXX XXXXXXXXX, FDI may preempt investments by domestic XXXXX which, with proper XXXXXXXXX, could XXXXX XXX XXXXXX successfully. XXX XXXXXXX XXXXXXX XXX XXX XXXX XXXXX XX the XXXXXXX XXXXXXXXXX deliberately uses XXXXXXXXX practices XX force competitors out XX business, or to retard their establishment. XXXXXXXXXX in places where XXX XXXX governments lack XXXXXXXXX competition policy XXXXX and skills to keep such behavior in check, a strong XXX XXXXXXXX XXX XXXXXXX the development of XXXXX capacities. XX most cases, XXXXXXXX out by XXX does not XXXXXXXXXXX mean an absolute XXXXXXXXX in total investment, but rather XXXX XXX XXXXXXXX XX not proportionate XX FDI inflows. </p> <p>XX. Real world evidence XXXXXXXX XXXX while crowding in or neutral XXXXXXX XX FDI XXXXXXXX, XXXXXXXX out XX not uncommon either. Much depends on the domestic XXXXXX </p> <p>18UNCTAD op. XXX. </p> <p>XX </p> <p>situation. XX an XXXXXXXXXXX XXXXXXXX carried out XX investigate XXXX issue, it XXX XXXXX XXXX neutral XXXXXXX dominated in half XX XXX XXXXXXXXX, while XXXXXXXX in XXX crowding out occurred with equal XXXXXXXXX, taking XXXXX in XX percent XX XXX countries each.19A general conclusion is that XXXXXXX the XXXXXXXXX XX crowding out cannot XX XXXXX out, it XXXX XXX XXXXXX XX be XXX XXXXXXX case. Equally inconclusive are the XXXXXX XXXXXXX XX mend the problem. XX XXXXX, for XXXXXXX, XXX XXXXXX to restrict XXXXXXX XXXXXXXXXXX in certain industries indeed led XX XXX emergence XX XXXXXXXXXX XXXXXXXX XXXXXXXXX. In XXXXXX, however, the XXXX policy XXXXXXXXXXXX in the XXXXX XXXXXX XX be XXX only costly XXX XXXX XXXXXXXXX XXXXXXX. The message is thus XXXX instead XX trying to XXXXX the problem XXXXXXX “restriction”, i.e. XXXXXXXXXXX XXX from XXXXXXXX certain XXXXXXX, efforts XXXXXX concentrate XX XXXXXXXXX XXXXXXXXXXX XXXXXXXXXXX XXXXXXXX XXX the XXXXXXX regulations so XX to XXXXXXX abusive practices in the domestic markets. </p> <p>X. The XXXXXXX XX XXXXXXX Problem XX a XXXXXX XX XXX </p> <p>39. Another wide-XXXXXX XXXXXXX XXXXXXXXX XXX is XXXX XX XXX XXXXXX XXXX profits XXX repatriated, they constitute a XXXXXXXXX XXXXXXX that has to be set against XXX net XXXXXX XXXXXXXXXXXX XX FDI XXXXXXX XX a XXXX XXXXXXX’s XXXXXXX XX payment. This XXXXX XXX of considerable interest in the early XXXXX, XXXX a majority XX developing XXXXXXXXX faced stringent XXXXXXX XXXXXXXX XXXXXXXXXXX. XXXX XXXXXXXXX XXXXXXX XXX capital XXXXXXXX XXXXXXXXXXXXX in many XXXXXXXXXX countries, XXXX XX XXXX of a XXXXXXX. However, as there XXX XXXXX a number XX XXXXXXXXX with various XXXXXXX of foreign exchange controls, the XXXXXXX XX payment XXXXX XXXXXXX XXXXXXXX. </p> <p>XX. XXXXXXXXXXXX, XXX XXXXXXX XX XXX problem XXXXXXX to be XXXXXXXXXX. Comparisons XX repatriated XXXXXXXX XXX FDI XXXXXXX XXXXXX the 1990s show that even in Africa, where the XXXXXXXXXXXX XXXXX was the highest (an XXXXXX XXXXXXX XX 75 XXXXXXX), XXXXX XXX never a negative XXXXXXXX balance as a result of FDI. Moreover, XXXXXXX indirect XXXXXXX XXXX to XX taken XXXX XXXXXXXXXXXXX when assessing the XXXXXXX XX payment impacts of XXX. XX is often XXX XXXX, FDI in trade activities XXXXXXXXX foreign exchanges through XXXXXXX, XXXXX XXXXXXX the XXXXXXXXX XXXXXXXX of repatriated XXXXXXX. Even XXXX XXXXXXXX in XXX-XXXXXXXX XXXXXXXXXX, XXX XXX enhance the competitiveness XX tradable activities, thus contributing XX the XXXXXXX XXXXXX performance of XXX XXXX country. XXXXXXXXX, in XXX long XXX, FDI should not XX a XXXXX for the balance XX XXXXXXX XXXXXXX, except in XXXXXXXXX with seriously misaligned XXXXXXX exchange XXXXXXX. XX XXXX XXXX, the real solution is XXX restricting FDI, XXX rather addressing XXX foreign exchange constraints XX XXX XXXXXXXXX. </p> <p>X. Enclave XXXXXXXXX Created by XXX </p> <p>41. The XXXX voiced concern with XXXXXX to FDI XX XXXXXXXXXXX XXXX XXXX XXXXXXXXXXX are narrowly based, XXXX XXXXXXX XXXXXXX XXXXXX XX the XXXXXXXXX XXXXXXXXX, XXX benefiting only a small XXXXX of the XXXXXXXXXX. Such XXXXXXXXX are most XXXXXXXXXXX XX XXX mining XXX other raw material extraction projects, which XXX typically very capital XXXXXXXXX XXX </p> <p>XXXX XXX. </p> <p>14 </p> <p>employ a XXXXX fraction of the XXXXXXXX workforce. This XXXXX that XXX XXXXXXXX, XXXXXX XXXXXXXX or forward, XXXXX XXXX the host economies, making their indirect XXXXXXX XX the XXXXXXXX XXXXXXX XXXXXXXXXX. To XXXX XXXXXX worse, sudden large XXXXXXX of XXXXXXX exchange tend XX raise the XXXX XXXXXXXX rate of XXX host economy XXX XXXX XXXXXX many non-XXXXXXXXXX XXXXXXXXXX XXXXXXXXXXXX (the XXXXX Disease). Moreover, such XXXXXXXX XXXXX display low XXXXXXX XXXXXXXXX for host countries XXXXXXX a large XXXXXXXX of export earnings flow XXXXXXXXXXX overseas to service XXX XXXXXXX XXXXXXX XXXXXXXXXX.20 </p> <p>XX. Another example XX XXX enclave XXXXXXXXX is the XXXXXX XXXXXXXXXX Zones (XXXX), XXXXX have become a popular strategy in XXXXXXXXXX countries to XXXXXX XXXXXXX and XX XXXXXXX XXXXXXXXXX. XXXX XXX wide range of exemptions and special privileges XXXXXXX to investments located in the EPZs, they XXX exhibit very limited linkage with XXX XXXXX economies XX XXXXX. XX particular, XXX XXXXX costs and avoidance of XXXXXX XXXXX XXX regulations are XXXXX the XXXX advantages XXXXXX by the FDI in such XXXXXXXXX, who XXXX tend to XX XXXXXXXXX XXX XXXX XXXXXX XXXXXXXXX to transfer skills or XXXXXXXXXXXX. Consequently, XXXX though XXX immediate XXXXXX XXX XXXXXXXXXX XXXXXXXX are undeniable, the long-term XXXXXXXXXXXXXX and economic impacts XX XXXXX zones XXX XXXX certain. </p> <p>XX. XXXXXXX, despite XXX natural XXXXXXXX of mining projects and EPZs XXXXXXX XXXXXXX XXXXXXXXX, this does XXX XXXX XX XX XXX XXXX and it XX not XXXXXX enough XXX XXXXXXXXXX XXXXXXX XXXXXXXXXXX XX shun XXXX XXX foreign investments into XXXXX XXXXXXXXXX. XXXX they need XX do is XX create the XXXXX XXXXXXXXXX and XXXXXX XXXXXXXXXXX XXX such investors XX XXXXXXX the XXXXX of XXXXX activities. XX XXX mining and natural XXXXXXXX projects, XXX XXXXXXX, XXXXX have XXXX XXXXXXXXXX examples XX countries XXXXX XXXXXXX XX XXX XXXXXXX XXXXXXXXXXXXX policies to XXXXX XXXXXXX excessive XXXXXXXX rate XXXXXXXXXXXX and sound regulations to XXXXXXXX XXX XXXXXXXXXXXXX XX insiders XXX XXXXXXXXXX XXX to use the XXXXXXXX gains XXX XXXXXXX alleviation.21In XXXX developing XXXXXXXXX, some of XXX XXXX XXX XXXXXXX XXXX “XXXXX” XXXXX with a number of XXXXXXXXXX to ensure XXXXXXX technology XXX skills transfer both XXXXXX XXX outside the XXXXX. </p> <p>III. XXX XXXXXXXXXXXX of FDI Location </p> <p>XX. With the rising XXXXXXXXXX XX XXX in world economy, XXXXXXXX XXXXXXXX have been XXXX to XXXXXXX the XXXXXXX that explain its XXXX and location. XX XXXXXXXX XX XXXXXXX (1980), “The XXXXXX of foreign direct investment XXX been XXXXXXXX XX the growth XX publications XXXXXXXXX XX XXX determinants XX these investments.”XXXXXX XXXXX XXXXX and XXX both XXXXXXXXX XXX XXXXXXXXXX XXXXXXXXX, XXXXXXXXXXX XXXX XXXXXXXX </p> <p>XXXXX Auty, R. X. (XXXX),XXXXXXXXXX XXXXXXXXXXX in mineral economies: XXX XXXXXXXX XXXXX thesis, London: XXXXXXXXX; and Sachs, J. and X. X. Warner (1995). “Natural XXXXXXXX XXXXXXXXX XXX XXXXXXXX growth.” XXXX Working XXXXX XXXX. 21Such examples XXXXXXX Botswana, Chile, Indonesia, Malaysia, XXXXXXXXX, Mexico and Oman. XXXXXXXXX, X.X. (1980). “Determinants XX foreign XXXXXX XXXXXXXXXX: a XXXXXX,”XXXXXXXXXXXXXXXXXXXX XXXXXXX, Vol. 116. </p> <p>XX </p> <p>political, economic, XXXXXX, and XXXXXX XXXXXXXXX in their search for “the most important” determinants XX XXX flows. XXX discussion below synthesizes XXX results of this vast XXXXXXXXXX and XXXXXXXXXX XXX XXXXX XXXXXXXX XX attractiveness that XXXX XXXXXXX XXXXXXXXX XX a country. </p> <p>45.Market demand. XXX XXXXX of XXX is positively XXXXXXXXXX by XXX XXXX of a XXXXXXX’s XXXXXX XXXXXX as measured XX GDP per XXXXXX. XXXX XXXXXXXX the casual observation XXXX most XXX flows to XXXXXXXX XXXX countries XXX it is particularly XXXX with XXXXXX-seeking type XX XXX. Even in developing countries, where XXX inflows XXXX XX XX more XXXXX-XXXXXXX, a country’s overall XXXXXXXXXXX XXXXX still has a strong XXXXXXX XX how XXXX XXX it attracts. </p> <p>46.Growth rate. FDI flows to where XXXX XXXXXXXX growth has been XXXXXXXX. X virtuous XXXXXX is observed XXXX: at XXXX time that FDI contributes XXXXXXXXXXXXX to XXXXXXXX growth, faster economic growth XXXXXXXX XXXX FDI XXXXXXX it increases XXXXXXX XXXXXXXXX’ XXXXXXXXXX in the XXXXXXX, XXXXX in XXXX pushes the growth rate even XXXXXX. In XXX XXXXX developed countries, studies XXXX shown XXXX FDI in fact follows, XXX proceeds, XXXX XXXXXXX XXXXXX or XX XXXXX XXX promise of growth. </p> <p>XX.XXXXXXXXX stability. XXXXX XXXXXXXXXXXXXX, incidences of political XXXXX, assassinations, XXXXX, or XXXXX XXXXXXXXX XXX XXXXX a dominant XXXXXXXX XXXXXXXXX XX foreign companies’ investment XXXXXXXXX. Indeed, XXXXXXXX XXXXXXX XX governments and the XXXXXXXXX policy XXXXXXX can XXXXXX an investor’s assets to XXXX XXXXXXXXX. In XXX absence XX significant reserves of XXXXXXXXXXXX natural resources (e.g. XXX), XXXXXX would any XXXXXXX investors accept serious XXXXXXXXX risks or XXXXXXXX policy XXXXXXXXX. </p> <p>XX.XXXXXXXXXXXXX XXXXXXXXX. A country’s overall macroeconomic XXXXXXXXXXX, XXXX as low XXXXXXXXX XXXX and balanced fiscal account, is a consistently XXXXXXXXXXX XXXXXX in XXXXXXX XXX decision XXXXXX of foreign investors XXXX assessing investment XXXXXXXXX. XXXXXXX XXXXXXXXXXXXX XXXXXXXXXXX XXXXX it difficult for investors to XXXXXXXX XXX XXXX XXXXX XXX XXXXXXX of XXXXX XXXXXXXXXXX, only in rare XXXXX would FDI flows to XXXXXX where there is XXXXXXXXXXXXXX or severe XXXXXXXXXX in XXXXX XXXXXXXX XXX external positions. </p> <p>XX.Infrastructure. With XXXXXXX XX XXX, XXXXXXXXXXXXXX encompasses both physical (e.g. roads XXX power) and social (e.g. health and XXXXXXXXX) concepts. XX XXX been XXXXXXXXXX shown around XXX world XXXX a well-developed XXXXXXXXXXXXXX XXXXXXX XXX a XXXX-XXXXXXX XXXXX XXXXX are major elements XX attractiveness to foreign XXXXXXXXX. This XX especially true where XXXX quality FDI (e.g. long-term transfer XX XXXXXXXX technology) XX concerned. </p> <p>50.XXXXXXXXXX XXXXXXXXXXX. XX is increasingly XXXXXXXXXX that XXX administrative XXX XXXXXXXXXX environment XX a XXXXXXX XXX have a XXXXXXXXXXX influence XX XXX XXXXX of FDI flows. While large XXX XXXXXXXX XXXXXXXXX XXX XX able to XXXXXX cumbersome and XXXXXX XXXXXXXXXX, XXXX may prove fatal to the XXXXX and XXXXXX of XXXXX and XXXXXX XXXXXXXXXXX. XXXXXXXX, XXXXXXXXX, XXXXXXXXXXXXXX, XXX XXX-XXXXXXXXXXX regulations often lead XX XXXXXXXXXX, XXXXX has been shown to XX a fatal XXXXXXXXX to XXX. </p> <p>XX </p> <p>XX.Investment XXXXXXXXX. XXXX a country XXX established a XXXXXXXXXX appealing investment climate, how XXXX FDI it gets XXXXXXX XXXX on its XXXXXXXXX efforts XX XXXXXXX XXXXXXX XXXXXXXXXX. Granted, XX XXXXXX XX XXXXXXXXX XXX XXXXXXXXXX XXX a truly XXXXXXXXXX-friendly environment, but XXXX other factors XXX similar – XX it XXXX in economies having attained a XXXXXXX level XX development – XXXXXXXXX efforts do XXXX a difference. </p> <p>52. XX this context, XXXXXXX should be XXXX XX XXX XXXXXX incentive XXXXXXX that host XXXXXXXXXXX XXXXX feel obliged XX XXXXX in order to attract FDI. XXXXX XXXX indeed XX XXXXXXXX of XXXX “XXX heavens” which XXX highly XXXXXXXXXX XXXX XXXXXX XXXXXXXXXXXXX companies. XXXX economic studies and XXXXXXX XX XXXXXXXXXXXXX investors, however, have repeatedly XXXXX that XXXXX incentives are not XXXXXX XX XXXXXXXXXXX in XXX XXXXXXXX decisions of foreign investors XX it XX XXXXXXX believed. XXXX XX, XXXX XXXXXX XXX investors XXXXX XXXX XXX lowest XXX liabilities XXXX it is XXXXXXXX – just like they XXXXX XXXXXX XXX factor XXXXX when all other conditions are equal - the various XXXXXXX discussed above are far XXXX XXXXXXXXX in their XXXX XXXXXXXXXX XXXX XXXXXXX fiscal XXXXXXXXXX. Whether investment XXXXXXXXXX XXX needed for a XXXXXXX XX XXXXXXX FDI and what XXXXX XX incentives XX XXX XXXXXX largely on the XXXXXX XX the XXXXXXXXXXX XXXXXXXXX’ activities, XXXXX XXXXXXXXXX XXX XXXXXXXXX abroad, with XXXX the XXXXXXX XXXXXXX XX competing XXX XXXXX XXXXXXXXX, and if the XXXXXXX XXX XXX fiscal capacity XX XXXXXXX the revenue losses XXX the administrative capacity XX XXXXXX its chosen XXXXXXXXX regimes. Overall, global companies give XXXX importance to the simplicity and stability XX a country’s XXX XXXXXX than generous XXX rebates. </p> <p>XX. What XX XXX States XXXX To XX? </p> <p>53. XXX previous discussions highlight XXX XXXX of XXX in economic development – while not a panacea, it XX a XXXXXXXX XXXXXXXXXX to the long term sustainable XXXXXX. For developing countries, it presents XXX most effective XXX XX enhance XXXXXXXXXXXX and to XXXXXXX an internationally competitive private sector; it creates XXXXXXXXXX and income opportunities; and it provides an XXXXXXXXX vehicle XX raise XXXXXXXXXXXXX XXX social standards. Many XXXXXXXXXX countries XXXX XXXXXX these benefits. XXX neither XXX XXX all XXX benefits flow automatically. Foreign investors XXX XXXXXXXX XXXXXX whose first and XXXXXXXX objective for XXXXXXXXX anywhere is XX maximize their XXXXXX profits, with or XXXXXXX benefits XX XXXX countries. XXXXXXXXXXX XXXX simple XXXXXXXX XXXXXXXXX, it is possible to XXXXX out XXX good sides XX XXX XXX avoid its XXXXXXXX XXXXXXX. </p> <p>54. XXXXXXXX, despite XXX tremendous potential XX FDI in XXXXXXXX development, it XXXX XXX provide XXXXXXX XX all XXXXXXXXXXXXX XXXXXXXX. For XXXXXXX, XXXXX XXX helps XXXXXXX XXXXXX XXXXXX, it XXXXXX automatically reduce XXXXXXXX XXXXXXXXXXXX and XXX XXXX XXXXXXXXXX them in XXX short run by XXXXXXX a premium on people XXXX XXXXXX skills. Public policies XXXX XX be in place XX XXXXXXX XXX XXXXXX segments XX society. The role of XXX in XXXX XXXXXXX is, by XXXXXX XX its impact on XXXXXXXXXXXX XXX XXXXXX, to generate the </p> <p>XX </p> <p>XXXXXXXXX XXXXXX to XXXX the government-led programs XXXX improve social safety nets XXX provide XXXXX social XXXXXXXX. Moreover, XXX XXXXXXXX XX social services XX XXX XXXX – from XXXXXXXXX schemes XX access XX basic services XXXX XX XXXXX XXX energy – can XXXX benefit XXXX XXXXXXXX on XXXXXXX investors. It XX thus imperative XXX the XXXXXXXX governments XX XXXXXX XXX pre-XXXXXXXXXX for FDI XX flow in XXX work its wonders. </p> <p>55. XXX XXXX fundamental pre- requisites for XXX are XXXXXXXXXX in XXX previous section. The governments XXXX XXXX to provide (i) basic XXXXXXXXX XXX XXXXXXXXXXXXX stability that XXXXXX XXXXXXXXXX predictability so XXXX investors XXX XXXX normal business decisions; (XX) a rules-based legal XXX regulatory XXXXXXXXXXX that XXXXXXXXXXX XXXXX XXXXXXXX rather XXXX XXXXXXXXX it; (XXX) an adequate XXXXXXXX and XXXXXX infrastructure XXXX assist XXX XXXXXX functioning XX XXX XXXXXX XXX XXXXXXXXXXXX XX knowledge; XXX (iv) appropriate XXXXXXXXXX XXXXXXXXX efforts that XXXXXXXXXXX XXXXXXXXXXX about XXX investment XXXX and service XXXXXXXX and potential investors. </p> <p>56. Beyond XXXXX XXXXX XXXXXXXXXX, the governments XXXX also XXXX to XXXXXXX XXXXXXX XXXXXXXX issues in order XX XXXXXX the XXXXXXXXXXX XX XXX XXXXXXXX of XXX. XXXX XXXXXXX:23 </p> <p>XX.XX even XXX XXXXXXXXXXX XXXXXXX XXXXX.XXX XXXXXXXX of XXX XXXX to be XXXXXXXXX when XXXXXXX XXXXXXXXX operate XX an even and XXXXXXXXXXX playing XXXXX. To XXXX end, XXXXXXXXXXX XXXX to XXXXXXX a business environment where competition, XXXX entry, XXXXXXXX XXXXXX and XXXX XXXX determine XXX XXXXX and XXX XXXXX. Foreign XXX domestic investors XXXX XX XX XXXXXXX XXXXXXX XX much as possible.XXXX amply demonstrated in XXXXXXXX XXXXXXXXXX, XXXXXXXX to XXXXXXXXX competition XX an XXXX playing XXXXX is the most important XXXXXXXXX XXX foreign and XXXXXXXX XXXXXXXXX to XXXXXXX XXXXXXXXXX XXX management practices, while XXXX XXXXX XX the key to establishing effective linkages between foreign investors and domestic suppliers and XXXXXXXXXXXX XXXX XXXX diffuse best XXXXXXXX in the XXXX economy.XX </p> <p>XX.Domestic capacity to XXXXXXX FDI benefits.X liberal XXX competitive XXXXXXXXXX climate creates XXX XXXXX XXX FDI XX XXXXX and XXXXX the potential for productivity growth in XXX host XXXXXXX, but XXXXXXXXXXXX XXXX only occur XX XXX XXXXXXXX XXXXXX are capable XX responding XX the XXX XXXXXXXXXX. As XXXXXXXXX in the previous sections, XXX most XXXXXXX deterrent XX XXXXX XXXXXXXXX of best practice XX a lack of XXXXXXXXXX XXXXXXXXXXXX to take XXXXXXXXX XX the XXXXXXXXXXXXX. XXX key XXXXXX measures XXX XXXX to improve XXX XXXXXXXXX and infrastructure so as XX increase XXX XXXXXXXX absorptive XXXXXXXX XX XXX fruits of FDI. </p> <p>59.XXXXXXXX up environmental and XXXXXX standards.XX globalization gradually XXXXX to XXXXXX XXXXXXXXXXXXX and social XXXXXXXXX XX FDI, governments XXXX to adjust XXXXX </p> <p>XXXXXX XXXXXXXXXX XXXXX XXXX XXXXX et XX. (2001). XXXX XX recognized XXXX given the special XXXXXXXX of FDI XX compared XX XXXXXXXX investments, XXXXXXXXXXX in treatment are not XXXXXXXX XXXXXXXXX. But XXXX need to XX XXXX XX a minimum. XXXXX negative impacts XX FDI are most often XXXXXX XX XXXXXXXXXXXXX practices in the XXXXXXXX markets XXX selective XXXXXXXXXXX granted to XXXXXXX XXXXX. See Lall, S. and X. XXXXXXXX (1977),Foreign investment, XXXXXXXXXXXXXX XXX developing countries, Westview XXXXX; and XXXXXX, X. H. (XXXX). “Foreign XXXXXX XXXXXXXXXX in the world economy.” XXX XXXXXXX Paper XX/95/XX. </p> <p>18 </p> <p>own XXXXXXXX to XXX XXXX the evolving XXXXX norm. In places where there remains a wide gap XXXXXXX XXX world standards and those of a XXXX XXXXXXX, reputable XXXXXXX XXXXXXXXX XXX be XXXXXX XX stay XXXX out of reputational concerns or they XXX face XXX XXXX XXXXXXXXXXX from XXXXXXXX firms not subject XX XX XXXXXXXXX norms. To XX XXXX, tougher standards XXXX XXXXX, XXXXX may affect both XXXXXXXX firms XXX XXXXXXX low-XXXX-XXXXXXX FDI. Governments XXXX XX XXXXXX how XX position themselves for XXX long XXXX XXXXXXXX XX XXXXX XXXXXXXX development. </p> <p>19 </p> <p>Bibliography </p> <p>Adams J. “Environmental XXXXXX XXX competitiveness in a globalized economy: conceptual issues XXX a review XX XXX XXXXXXXXX evidence”, in OECD Globalization XXX XXXXXXXXXXX: XXXXXXXXXXX XXXXXXXXXXXX, 1997. </p> <p>Agarwal, X.P. “XXXXXXXXXXXX XX XXXXXXX direct investment: a XXXXXX,”XXXXXXXXXXXXXXXXXXXX XXXXXXX, Vol. 116, XXXX. </p> <p>XXXXXX, B. and X. E. XXXXXXXX. “Do domestic XXXXX benefit from direct XXXXXXX direct XXXXXXXXXX? XXXXXXXX XXXX Venezuela”,XXX American XXXXXXXX XXXXXX, XXX. XX, No. 3, XXXX. </p> <p>Auty, X. X.XXXXXXXXXX XXXXXXXXXXX in mineral economies: XXX XXXXXXXX curse thesis, London, Routledge, 1993. </p> <p>Barnes, J. XXX R. Kaplinsky. “Globalization XXX XXX XXXXX of local XXXXX”. Automobile component XXXXXXX in South XXXXXX, XXXX. </p> <p>Barro, R.J. “Notes XX XXXXXX accounting,” XXXX Working Paper No. XXXX, 1998. XXXXX G. and H. Tan.Interfirm XXXXXXXX and productivity growth: XXXXXXXX </p> <p>form Malaysian XXXXXXXXXXXXX,mimeo, The World Bank, XXXXXXXXXX, D.X., 2000. Borensztein, X. XXX J. W. Lee. “How XXXX foreign XXXXXX investment XXXXXX economic </p> <p>growth?”, XXXX Working Paper No. XXXX, 1995. </p> <p>XXXXXXX, X. and J. XXXXXXX. “The XXXXXXX impacts of foreign XXXXXX investment on XXXXXXXX XXXXXXXXXXX in XXXXXXXX: XXXXXXXXX responses”, XXXX. </p> <p>XXXXXXX, S. XXX B. XXXXXXX. “XXXXXXX investment XXX productivity XXXXXX in Czech XXXXXXXXXXX”, XXXXXX XXXXXXXX Working Paper 2115, XXX World XXXX, Washington, D.X., 1998. </p> <p>XXXXX, C XXX X. XXXXXX. “Les effets indirects des entreprises multinationales sur l’XXXXXX XXX XXXX d’acceuil”, XXX XXXXXXX Paper No. 72, XXXX. </p> <p>Eskeland G. and X. XXXXXXXX. “Moving XX greener XXXXXXXX? XXXXXXXXXXXXX and the XXXXXXXX from XXXXX, XXXXX XXX XXXXXXXX,” RPED Paper No. 81, XXX XXXXX Bank, XXXXXXXXXX, X.X., 1997. </p> <p>Gentry, B. (ed.).Private capital XXXXX XXX the environment: lessons from Latin XXXXXXX,Cheltenham, XXXXXX XXXXX XXXXXXXXXX, XXXX. </p> <p>20 </p> <p>XXXXXX, E. X. “Foreign direct investment in XXX XXXXX economy.” XXX Working Paper WP/95/XX, 1995. </p> <p>Klein, M., X. XXXXX, XXX X. Hadjimichael. “XXXXXXX XXXXXX XXXXXXXXXX XXX poverty Reduction”, XXXXXX Research Working Paper No. 2613, XXX World Bank, Washington, D.C., XXXX. </p> <p>Lall, S. “XXXXXXXX inter-firm XXXXXXXX in XXXX: an empirical study,”XXXXXX XXXXXXXX XX Economics XXX XXXXXXXXXX, Vol. 42, No. 3 on India, XXXX. </p> <p>Lall, S. and X. Streeten.XXXXXXX investment, XXXXXXXXXXXXX and developing XXXXXXXXX, Westview Press, XXXX. </p> <p>XXXXXXX, D.Pollution XXX XXX XXXXXXXX for XXX world product, XXXXXXXXX, Cambridge London, Routledge, 1993. </p> <p>Maddison, A. “XXXXXX and XXXXXXXX in XXXXXXXX XXXXXXXXXX ecibinues: techniques XX XXXXXXXXXXXX assessment”,XXXXXXX XX XXXXXXXX XXXXXXXXXX, XXX. 25, 1987. </p> <p>XXXXX XXXXXXXX XXX XXXX XXXXX XXXXXXXXXX on FDI and its XXXXXX XX XXXXXXX XXXXXXXXXXX, XXXXXXXX 1998. </p> <p>Pearson, C.XXXXXXXXXXXXX XXXXXXXXXXXX, the XXXXXXXXXXX XXX the XXXXX world, North XXXXXXXX, Duke XXXXXXXXXX Press, 1987. </p> <p>Ramachandran, X. and M. K. XXXX. “XXX XXXXXXX of foreign ownership in XXXXXX: evidence XXXX XXXXX, Kenya XXX Zimbabwe”, RPED XXXXX No. 81, The World XXXX, XXXXXXXXXX, X.X., XXXX. </p> <p>Sachs, X. XXX X. X. XXXXXX. “XXXXXXX resource abundance and economic XXXXXX.” XXXX XXXXXXX Paper </p> <p>XXX United Nation XXXXXXX, 1944. </p> <p>XXXXXX,XXXXX XXXXXXXXXX XXXXXX, 1994. </p> <p>XXXXXX,XXXXX XXXXXXXXXX Report, 1999. </p> <p>XXXXXX.XXXXX XXXXXXXXXX XXXXXXXX XXXXXXXXX, Brazil and XXXXXXXX, XXXX. </p> <p>XXXXXXX , X. “Racing to the bottom? XXXXXXX XXXXXXXXXX XXX air XXXXXXXXX in XXXXXXXXXX countries”, XXXXX, XXX XXXXX XXXX, XXXXXXXXXX, X.C., XXXX. </p> <p>21 </p> <p> </p>">
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