Foreign Direct Investment (FDI) is a cornerstone of the global economy, serving as a primary vehicle for capital, technology, and management expertise to cross borders. While often viewed as a catalyst for growth, its actual impact is shaped by a complex interplay of theoretical motives and varying empirical evidence. 1. Theoretical Frameworks
: Evidence for "horizontal spillovers" (benefits to local competitors) is often weak, as multinationals actively guard their technology. However, "backward linkages"—where foreign firms upgrade the capabilities of their local suppliers—show more robust positive effects. Foreign Direct Investment: Theory, Evidence and...
: John Dunning’s framework suggests FDI occurs when three conditions align: O wnership (proprietary assets), L ocation (host country benefits like low costs or market size), and Internalization (the benefit of keeping operations "in-house" rather than contracting out). Foreign Direct Investment (FDI) is a cornerstone of