Low-income countries (LIDCs) are typically characterized by intermittent and very modest access to private external funding sources. Motivated by recent developments in private flows to LIDCs this paper makes two contributions: First, it constructs a new comprehensive dataset on gross private capital flows with special focus on non-FDI flows in LIDCs. Concentrating on LIDCs and more specifically on gross non-FDI private flows is intentionally aimed at closing a gap in existing datasets where country coverage of developing economies is limited mainly to emerging markets (EMs). Second, using the new data, it identifies several shifting patterns of gross non-FDI private inflows to LIDCs. A surprising fact emerges: since the mid 2000's periods of surges in gross non-FDI private inflows in LIDCs are broadly comparable to those of EMs. Moreover, while gross non-FDI inflows to LIDCs are on average much lower than those to EMs, we show that the LIDC top quartile gross non-FDI inflow is comparable to the EM median inflow and converging to the EM top quartile inflow.

The Global Investment Competitiveness report presents new insights and evidence on drivers of foreign direct investment (FDI) in developing countries, and FDI’s role in development. The report’s survey of 750 executives of multinational corporations finds that a business-friendly legal and regulatory environment is a key driver of investment decisions in developing countries, along with political stability, security, and macroeconomic conditions. The report’s topic-specific chapters explore the potential of FDI to create new growth opportunities for local firms, assess the power of tax holidays and other fiscal incentives to attract FDI, analyze characteristics of FDI originating in developing countries, and examine the experience of foreign investors in countries affected by conflict and fragility. Three key features of this Global Investment Competitiveness report distinguish it from other publications on FDI. First, its insights are based on a combination of first-hand perspectives of investors, extensive analysis of available data and evidence, and international good practices in investment policy design and implementation. Secondly, rather than exploring broad FDI trends, the report provides detailed and unique analysis of FDI depending on its motivation, sector, geographic origin and destination, and phase of investment. Thirdly, the report offers practical and actionable recommendations to policymakers in developing countries wishing to reform their business climates for increased investment competitiveness. As such, the report is meant to complement other knowledge products of the World Bank Group focused even more explicitly on country-level data, detailed reform diagnostics, and presentation of best practices. We are confident this report will bring value and fresh perspectives to a variety of audiences. To governments and policymakers, including investment promotion professionals, the report offers direct insights into the role of government policies and actions in investors’ decision-making. To foreign investors and site location consultants, the report provides information on FDI trends and drivers across sectors and geographies. For academic audiences, the new datasets on investment incentives and FDI motivations enables opportunities for additional research and analysis. Lastly, for development assistance providers and other stakeholders, the report highlights key approaches for maximizing FDI’s benefits for development.

This book presents the results of a groundbreaking study on ‘spillovers’ of knowledge and technology from global value-chain oriented foreign direct investment (FDI) in Sub-Saharan Africa, and discusses implications for policymakers hoping to harness the power of FDI for economic development.

Explores three related issues of foreign direct investment (FDI) from the point of view of the host country: benefits and risks; the effectiveness of international markets in providing FDI to developing countries; and the kinds of policies that allow countries to capture the benefits and avoid the risks of FDI. Annotation copyrighted by Book News, Inc., Portland, OR

In development literature Foreign Direct Investment (FDI) is traditionally considered to be instrumental for the economic growth of all countries, particularly the developing ones. It acts as a panacea for breaking out of the vicious circle of low savings/low income and facilitates the import of capital goods and advanced technical knowhow. This book delves into the complex interaction of FDI with diverse factors. While FDI affects the efficiency of domestic producers through technological diffusion and spill-over effects, it also impinges on the labor market, affecting unemployment levels, human capital formation, wages (and wage inequality) and poverty; furthermore, it has important implications for socio-economic issues such as child labor, agricultural disputes over Special Economic Zones (SEZ) and environmental pollution. The empirical evidence with regard to most of the effects of FDI is highly mixed and reflects the fact that there are a number of mechanisms involved that interact with each other to produce opposing results. The book highlights the theoretical underpinnings behind the inherent contradictions and shows that the final outcome depends on a number of country-specific factors such as the nature of non-traded goods, factor endowments, technological and institutional factors. Thus, though not exhaustive, the book integrates FDI within most of the existing economic systems in order to define its much-debated role in developing economies. A theoretical analysis of the different facets of FDI as proposed in the book is thus indispensable, especially for the formulation of appropriate policies for foreign capital.

In 2010, the Latin American and Caribbean region showed great resilience to the international financial crisis and became the world region with the fastest-growing flows of both inward and outward foreign direct investment (FDI). The upswing in FDI in the region has occurred in a context in which developing countries in general have taken on a greater share in both inward and outward FDI flows. This briefing paper is divided into five sections. The first offers a regional overview of FDI in 2010. The second examines FDI trends in Central America, Panama and the Dominican Republic. The third describes the presence China is beginning to build up as an investor in the region. Lastly, the fourth and fifth sections analyze the main foreign investments and business strategies in the telecommunications and software sectors, respectively.

The role of foreign direct investment (FDI) in international capital flows is examined. Theories of the determinants of FDI are surveyed, and the economic consequences of FDI for both host (recipient) and home (investor) nations are examined in light of empirical studies. Policy issues surrounding possible negotiation of a “multilateral agreement on investment” are discussed.