ABSTRACT
Economic growth is a process of change through time, which involves an interrelationship between economic, political and social factors. This chapter explores the views of the pro-globalisation school of thought but focuses on only the key element of globalisation, foreign direct investment (FDI). It presents a brief discussion of the development of the growth theory starting with the classical theory through to the endogenous theory, and incorporates the role FDI is increasingly playing in the endogenous theory. The chapter examines how FDI can influence the growth process of host developing countries through its contribution to their human resources development, new technology transfer, capital formation, international trade, environmental management and linkages. Human resource capacities can be categorised into entrepreneurial, technological and managerial capacities. Employment is very important to economic growth because human capital deteriorates when it is left idle. FDI contributes to economic growth directly by creating employment opportunities and indirectly through the creation of employment opportunities in other organisations.
