ABSTRACT
The large literature on foreign direct investment (FDI) and development reveals more than its fair share of controversy, large parts of it unedifying and unscientific. Until the 1980s, the general approach to transnational corporations (TNCs) and developing host countries reflected considerable suspicion and reservation. As Caves (1982) put it,
MNEs have encountered hostility and resentment in all countries that host substantial foreign investment, but nowhere more than in LDCs, where they get blamed for the national economy’s manifest shortcomings, not to mention that historical sins of colonial domination. Economic analysis has played no great part in resolving disputes between critics and defenders of the MNE’s role in development processes. There is little consensus on what institutions and policies most effectively promote the goal of economic development, and writings on the economic development, and writings on the economic role of MNEs have correspondingly run a high ratio of polemic to documented evidence.
