Different Arguments for and Against the Role and Impact of Foreign Investment on The Development Potentials of Developing Countries: An Overview

Abstract

This study explores different arguments for and against the role of foreign investment on the development potentials of developing countries. Generally, foreign investment comes to host countries through transnational corporatios (TNCs). These corporations are global profit-seeking organisations, investing in more than one country and supplying financial capital, management, technology and marketing enterprise. The arguments for and against the role and impact of foreign investment focus mainly on the following areas: economic growth, technology transfer, balance of payments, export performance, employment, environment, and transfer pricing as well as socio-cultural aspects of TNCs. The study concludes that with the appropriate government policies, such as unbiased trade regime, market reform and cooperation, developing countries could provide more benefits from foreign investment.