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FDI: good or bad?

Syllabus: Evaluate the impact of foreign direct investment (FDI) for economically less developed countries.

Foreign Direct Investment: good or bad for less developed countries?

There are both costs and benefits associated with foreign direct investment and multinational corporations operating in less developed countries. Trying to gain an objective view can sometimes be quite difficult. Articles in the media are inclined to take a pro, or anti, FDI/MNC stance. In some countries, the benefits to the country may outweigh the problems, whilst in others it may be the reverse. Multinational corporations behave in very different ways with regard to their involvement in the economy or society of the host country.

Note the command word included in the Syllabus statement so a Data Response Qd could be about this evaluation or discussion


November 2013

Q3d Using information from the text/data and your knowledge of economics, discuss the likely effects of Chinese and Indian foreign direct investment (FDI) in Africa on the development of countries in Africa.     [8 Marks]

May 2013

Q4d Using information from the text/data and your knowledge of economics, discuss the possible effects on the economic development of Cambodia of investment from China and the United States (US).                [8 Marks]


Visit the two following websites and review the arguments from the two opposing perspectives.

The first is the website of Unilever, one of the world's largest companies, which highlights a number of case studies that showcase the positive impact of the mulitinational company on the economic development of a number of countries.

The second links to an article, Multinational Corporations: The New Colonisers in Africa written by Lord Aikins Adusei, who takes an opposing and critical standpoint against the role of foreign direct investment


You may want to surf the web and see if you can find some examples where foreign direct investment and multinational corporation activity has contributed positively to the economic development of the country, and some where it has not been a positive experience. In both cases, be careful to think whether the impact has been on economic growth or development. Remember they are not the same!