Foreign direct investments as an instrument of solving the poverty problem in developing countries
Journal Title: Visnyk Ternopilskoho natsionalnoho ekonomichnoho universytetu - Year 2016, Vol 2, Issue
Abstract
The theoretical and practical possibilities of using foreign direct investment (FDI) as an instrument of international poverty alleviation policy in developing countries were investigated. The consequences of foreign direct investments (FDI) to the national economy, including the impact on the balance of payments of a host country, economic growth, modernization of production processes, innovative development, etc. were considered. There was specified the possibility of actualization of the phenomenon of “Dutch disease” in connection with the main concentration of foreign investment in a mostly raw materials sector. Interrelations of such indicators as foreign investments, savings and GDP growth were analyzed. The author has emphasized the danger of excessive financial openness of developing country in conditions of global instability and FDI inflows in unreasonable quantities that pose a threat to economic sovereignty. The main approaches to determining optimal volume of FDI for the host country in the context of promoting economic growth and sustainable development were characterized. The specific behavior of multinational companies in less developed countries was described. In particular, the negative effects of foreign investments coming through the channels of TNCs on the economic development of a host country were indicated. The use of a such definition as the “FDI complement” to research their implications for national economy was proposed. On the basis of Porter’s diamond adaptation the factors hindering a developing country to become competitive on the international investment market and ensure the rationality of their use as a tool for poverty reduction were shown. The basic orientations of economic policy in attracting FDI were outline.
Authors and Affiliations
Victoria Adamyk
Keywords
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