chapter  6
Government policies towards foreign direct investment
Pages 32

Governments in developing countries are increasingly looking for best-practice policies towards Foreign Direct Investment (FDI).2 Renewed confidence in the positive benefits of FDI has led many countries that were restricting FDI in the 1960s-1980s to be more open towards FDI in the 1990s (Safarian, 1999) and beyond. Governments are liberalising FDI regimes as they associate FDI with positive effects for economic development in their countries (e.g. Borensztein et al., 1998; Lall, 2000a). Of course, in actual practice objectives to attract FDI differ by country (e.g. technology, market access, growth and poverty alleviation) and the effects of FDI may not always be desired (neglect of local capabilities, environmental damages, inequality between individuals or regions).