| II. THE POTENTIAL OF FDI FOR POVERTY REDUCTION............................................. 3 (2007) | |||||||||||||
Abstract | |||||||||||||
| The last decade of the 20 th century has seen major shifts in the size and composition of cross-border capital flows into developing countries. Foreign direct investment has come to swamp all other financial flows. Does foreign direct investment support sound development, in particular, does it contribute to poverty reduction? FDI is a key ingredient for successful economic growth in developing countries. This is because the very essence of economic development is the rapid and efficient transfer and adoption of “best practice ” across borders. FDI is particularly well suited to effect this and translate it into broad-based growth, not least by upgrading human capital. As growth is the single-most important factor affecting poverty reduction, FDI is central to achieving that goal. The key alternative approaches that might direct more of the fruits of growth to the poor are government-led programs that improve social safety nets and explicitly redistribute assets and income. But these are not alternatives to sensible growth-oriented policies. They are complements. Growth is needed to fund these programs. Moreover, the delivery of social services to the poor – from insurance | |||||||||||||
Publication details | |||||||||||||
| |||||||||||||