Promoting foreign direct investment in developing countries

Over 100 developing nations have investment promotion offices or agencies, reflecting a sense of competition to attract foreign direct investment, most of which flows to a few favorite countries. The investment promotion function is often underfunded and haphazard. This article outlines policy choices for investment promotion and discusses alternative modes of organizing this crucial activity. It proposes a novel bounty / royalty scheme whereby investment can be attracted.     

The role of Capital markets in developing countries

Capital markets in developing countries are under increasing political pressure. What solutions are likely to the conflicts and problems that arise over the need to integrate them into exploiting the resources, and fulfilling the needs, of a developing economy as a whole?     

Effects of foreign direct investment in developing countries

The effects of direct investments and multinational corporations remain a highly contentious issue. The author traces here the reasons for the large number of diverging statements and comments on this issue and considers what political conclusions should be drawn from this wide variety of views.     

New forms of foreign investment in developing countries

To a growing extent, since the early 1970s “new forms” of foreign investment have developed which constitute a departure from full ownership of the capital by the foreign investor and the practice of “packaged” management services. What view is to be taken of these new forms of investment from the development policy aspect?     

The impact of civil war on foreign direct investment flows to developing countries

We investigate the impact of civil war on foreign direct investment (FDI) flows to developing countries. We employ a new data-set that disaggregates FDI inflows to primary, secondary and tertiary sectors. Second, we control for a richer set of economic and institutional variables that could determine FDI inflows including population, gross domestic product (GDP) per capita, the degree of trade openness, exchange rate variability, inflation, the governance structure of the host country using International Country Risk Guide data and its regime type using the POLITY autocracy–democracy data. We also address the reverse causality between FDI and conflict and the potential endogeneity of explanatory variables by employing dynamic system generalised method of moments (GMM) techniques in estimation. Our results indicate that primary sector FDI flows to developing countries are not significantly affected by civil war, whereas secondary and tertiary sectors FDI are more sensitive to such outbreak, potentially leading to reversals of existing FDI. Among institutional variables, government stability and control of corruption are more significant compared to regime type, law and order, and bureaucratic quality.     

The conduct of international enterprises in developing countries

Do multinational enterprises act in developing countries as a motive force for progress or do they perpetuate colonialism by different means? The fierce controversy on this question still continues, fuelled not only by basic ideological differences but by dearth of empirical evidence. Prof. Pausenberger is helping to overcome the lack of knowledge.     

The integration of the developing countries into the world economy

Despite decades of efforts, it has not yet been possible to integrate the developing countries satisfactorily into the world economy. Professor Glastetter examines the reasons for the failure of the integration strategies pursued hitherto and discusses the prospects of success with alternative approaches. Abridged version of a paper presented at a conference organised by the Evangelical Academy, Loccum, between 16th and 18th September 1988.     

The impact of agricultural price policy in developing countries

Agricultural price policies are under closer review now in many developing countries. There is a growing tendency to rely more on market forces. What impact have agricultural price policies had on the performance of the agricultural sector in developing countries until now?     

Employment policies in developing countries

The ILO World Conference on Employment was held in Geneva from June 4 to 17, 1976 and after long discussions adopted an action programme which provided for quite a number of measures designed to ensure full employment in developing countries until the year 2000. The problems posed by a policy of full employment in developing countries are indicated in the following article which demonstrates that a change in the inherited power structures is a major prerequisite for an effective policy of full employment.     

Tourism promotion in developing countries

When announcing its ideas on development policy in the Second Development Decade which began in 1971, the Federal Government said that it “wishes to promote tourism in sultable less developed countries (LDCs) through improvement of the infrastructure, especially transport, provision of accommodation and training of the required personnel, making use of development banks in suitable cases”.     

German investment in developing countries

The Pros and Cons of direct investment promotion measures in overseas countries have recently become the subject of fierce controversy in all industrialised countries, including the Federal Republic of Germany. Advocates and opponents of such measures, however, almost exclusively try to analyse the desirability and effects of such investments in the industrialised countries only, virtually disregarding the problem of direct investment in developing countries. The Department on Development Policies of the Hamburg Institute for International Economics has therefore recently begun to investigate the volume, the motivation, and the success of German investments in the “Third World”. The following report discusses the first results of this study.     

Agricultural policy in developing countries

Development failures are less the result of “natural” short-comings, but are caused instead by false conceptions and by the misapplication of experience from highly-developed economic systems to countries in the initial development stage. The following article points out the pit-falls and discusses some alternative strategies.     

State enterprises in developing countries

The role of state-owned enterprises in the development process in the Third World is the subject of serious controversy. This article attempts to test empirically whether there is a relationship between the importance of public production in developing countries and their overall economic performance.     

Financial policy in developing countries

The present financial policies of the developing countries are hardly likely to create favourable conditions for economic growth. A change can only be brought about if the financing of development projects and the imports of consumer goods can be successfully integrated in an overall plan for economic growth and the generation of new sources of revenue for the state.