Abstract
Abstract While popular opinion often pictures FDI flowing in search of lowest-wage, lowestskilled activities in emerging markets, actual FDI to such countries increasingly addresses medium to high-skilled manufacturing sectors. Such FDI might be called “Quality FDI” that contributes to the creation of decent and value-adding jobs, enhancing the skill base of host economies, facilitating transfer of technology, knowledge and know-how, boosting competitiveness of domestic firms and enabling their access to world-wide markets, as well as operating in a socially and environmentally responsible manner. To attract such quality FDI, host countries need mindfully tailored policies. Recent research offers evidence for strategies in developing countries that successfully turned FDI into such quality FDI.
Highlights
Citation Theodore Moran, Holger Görg, Adnan Serič, and Christiane Krieger-Boden (2018)
While popular opinion often pictures 10 manufacturing FDI flowing in search of lowest-wage, lowest-skilled activities in emerging markets, the data show that FDI in 0 ø 1990-1992 ø 2005-2007 ø 2009-2011 Higher-Skilled Sectors developing countries increasingly flows to Resource-intensive Sectors medium to high-skilled manufacturing
Survey data from FDI in industry sectors such as autos and auto equipment, electronics, chemicals, and industrial equipment -- in comparison to garments and footwear -- show that foreign investors in higher-skilled activities pay their workers two to three times as much for basic production jobs, and perhaps ten times as much for technical and supervisor positions, in comparison to what is earned by employees in comparable positions in lower-skilled MNC operations. These FDI flows to middle-skilled manufacturing industries might be called “Quality FDI” that contributes to the creation of decent and value-adding jobs, enhancing the skill base of host economies, facilitating transfer of technology, knowledge and knowhow, boosting competitiveness of domestic firms and enabling their access to markets, as well as operating in a socially and environmentally responsible manner
Summary
Citation Theodore Moran, Holger Görg, Adnan Serič, and Christiane Krieger-Boden (2018). For any reasonable analysis of the impact of foreign direct investment on emerging market economies, FDI flows must be divided into at least five separate industry segments, each with distinctive policy and regulatory challenges. Does FDI in services crowd “in” or crowd “out” indigenous investment in services, and which outcome is more beneficial for host-country development?
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