Foreign direct investments: Issues and impact for developing countries

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[...] Syria is trying to develop the east of its territory. As a general rule those policies have enable a noticeable reduction of disparities cities/countryside. But the relative loss of importance of capital cities doesn't mean that states accept and even sometimes favor a kind a concentration because of scale economies. According to Denis, the emergency of the macro-economic development impose the concentration of the investment effort: “the reduction of poverty is expected to result from the increase in global economic performances but wealth repartition is never questioned” Conclusion The impact of FDI on growth is hard to calculate (sometimes also because of data constraints in least developed countries) and variable depending on the country but it can be said as a conclusion that the positive effects, some host countries witness, largely result from the development strategies they adopted. [...]

[...] Indirect effects are more difficult to be identify because of a snow bowl effect statisticians cannot measure. What we know about the impact of foreign direct investment on development should be reconsidered to reappraise the policies pursued, to promote FDI and to increase its beneficial impact. Thierry Mayer at the OECD published a survey[17] a few months ago demonstrating that “The relationship between FDI and economic growth is not as strong as was previously claimed (indeed, while there is a correlation between inward FDI and growth, it is not possible statistically to invalidate the hypothesis that those two outcomes are results of a common cause) namely the pursuit of sound economic policies”. [...]

[...] Vertical FDI can be either backward (when an industry abroad provides inputs for a firm's domestic production process) or forward (when an industry abroad sells the outputs of a firm's domestic production) The horizontal strategy concerns investments in the same industry abroad as a firm operates in at home. It is employed when there are tariffs barriers. The range of product offered and the technologies used are those of the parent company. Until the end of the seventies most of FDI were rather vertical, whereas most of them are today horizontal. FDI are in various types according to the strategies of TNC. [...]

[...] A too wide technological gap between the emitting and the receiving country prevent the latter from absorbing the imported technologies. One can try to isolate the characteristic of FDI sparking substantial spillovers off. Blomstrom and Sjoholm[12] believe that they are more the consequence of the concurrence's strengthening resulting from FDI, than from other factors like the degree to which the foreign company takes part in the local industry. Some constraints slow down the passage of a foreign technology in a host country to a real acquisition of this technology by this country. [...]

[...] Foreign Direct Investments: issues and impact for developing countries How beneficial are actually FDI for developing countries? Table of contents Introduction 2 Low-down on foreign direct investments 2 Impact on receiving countries: expectations and realities 3 Towards a reinforcement of territorial discrepancies? 6 Conclusion 7 References 7 Introduction In the context of globalization, the increasing interconnection of markets and the geographical burst of the production chain can represent an opportunity for developing countries to join the world economy and by this way to promote their growth. [...]