FDI and human development: The role of governance, ODA, and national competitiveness

Abstract

This study examines the effect of foreign direct investment (FDI) on human development in the Association of Southeast Asian Nations. We demonstrate the moderating role of governance, official development assistance (ODI), and national competitiveness in the relationship between FDI and human development. Predatory or invasive FDI hampers human development in the host country. Governance, ODI, and national competitiveness play a positive moderating role in this relationship. Economic growth can be driven by FDI; however, FDI itself does not improve human development, as measured by healthcare, education, and income. Good governance regulates FDI ethics and protects against unhealthy FDI, thereby improving human development. A more specific and inclusive governance framework is crucial for improving human development.