ABSTRACT
This chapter analyses the history of thought on foreign direct investment (FDI) on two principal issues confronting developing economies: the cost and benefit of FDI, and the appropriateness of the technological assets of the transnational corporations (TNC). Much of the mainstream thought in the neo-liberal tradition believe that TNCs do enlarge the scope of developing countries by grafting their global value chain into local industries. The mainstream business school approach draws on the neoliberal belief that the efficiency of large TNCs confers special advantages upon host countries; and the TNCs’ offerings are valuable to them. In the radical analysis, the entry of large TNCs is said to have a powerful influence on industrial organisation in host countries. The Dependencia approach hypothesizes that TNCs internalize and wrest control of foreign operations not just to achieve efficiency, but as a strategic move to eliminate competition and appropriate fully the returns on their assets.
