Skip to main content

Is foreign direct investment good for the poor? A review and stocktake

Buy Article:

$53.17 plus tax (Refund Policy)


Few issues in the development process raise as much heat as the role of the international private sector in the form of transnational corporations (TNCs) and foreign direct investment (FDI). This article reviews the most recent research on the impact of FDI on economic growth and poverty reduction in developing countries. A brief history of FDI is given. This is followed by discussion of the conceptual transmission mechanisms linking FDI, growth, and poverty. The available empirical evidence is then discussed. It is argued that it is not a question of whether FDI is good or bad for social and economic development, but that its impact is determined by the terms upon which FDI is accepted. Although overall the evidence on FDI, growth, and poverty is not conclusive, research has had a tendency to suggest that the benefits of FDI are linked to the FDI policy regime; and that the current orthodoxy of maintaining a highly liberal FDI policy regime leads to a situation whereby developing countries have a precarious trade-off to make between attracting FDI and maintaining policy instruments to extract the benefits of any inflows.

Document Type: Research Article


Affiliations: Development Studies, School of Social Sciences and Cultural Studies, University of East London, Docklands Campus, London, E16 7RD, UK

Publication date: June 1, 2005

More about this publication?

Access Key

Free Content
Free content
New Content
New content
Open Access Content
Open access content
Subscribed Content
Subscribed content
Free Trial Content
Free trial content
Cookie Policy
Cookie Policy
Ingenta Connect website makes use of cookies so as to keep track of data that you have filled in. I am Happy with this Find out more