Is Foreign Direct Investment (FDI) the Solution to Unemployment?
The role of foreign direct investment (FDI) in promoting growth and sustainable development has never been substantiated. There isn’t even an agreed definition of the beast. In most developing countries, other capital flows – such as remittances – are larger and more predictable than FDI and ODA (Official Development Assistance). Several studies indicate that domestic investment projects have more beneficial trickle-down effects on local economies. Be that as it may, close to two-thirds of FDI is among rich countries and in the form of mergers and acquisitions (M&A). All said and done, FDI constitutes a mere 2% of global GDP. FDI does not automatically translate to net foreign exchange inflows. To start with, many multinational and transnational “investors” borrow money locally at favorable interest rates and thus finance their projects. This constitutes unfair competition with local firms and crowds the domestic private sector out of the credit markets, displacing its investments in t
