ABSTRACT
This chapter presents issues and the knowledge base about foreign direct investment (FDI) in general through a reflective synthesis of the pertinent conceptual and empirical literature. FDI theory is based on several integrative theories such as international capital market theory, firm theory and the theory of international trade. FDI is assumed to transfer technology and know-how, as well as facilitate access to export markets. These economic effects of FDI are widely recognised. The political, social and cultural effects of FDI are being noticed, especially by citizens of the host country. However, the new trend of FDI in large-scale agriculture is to produce basic food and biofuels to be exported to the investing country. A host country’s FDI policy should aim to improve the capacity of employees within institutions promoting FDI in order to serve FDI activities better. There are conflicting views on the relationship between FDI and environmental standards.
