A Case Study of Foreign Direct Investment
CASE –STUDIES- FOREIGN TRADE
A Case Study of Foreign Direct Investment in Central America.
The attraction of foreign direct investment (FDI) constitutes a fundamental element to support strategies that aim to achieve sustained economic growth in developing countries. This is because globalization and the attendant opening of the economies to competition require increased financial resources and technology, which would be impossible to obtain under a policy of autarky.1 Though relatively well-established principles exist to explain why a multinational company may decide to move into a specific country, each experience has its idiosyncratic elements from which both theorists and policymakers can learn important lessons. There is less consensus, however, on the potential positive or negative effects that FDI may have on the host economy, and on what factors determine these effects.
This chapter presents a case study of foreign direct investment (FDI) going into a small country. It analyzes the advent of Intel, manufacturer of microprocessors, to Costa Rica, a country that is very small indeed when compared with other potential locations for a company of that nature. The literature on FDI contains theoretical formulations on the factors that attract FDI and on policies oriented towards increasing FDI flows to a country.
2 There are also models of the effects that such investment has on the host country at both the micro- and macroeconomic levels. Recent attempts to use cross-country data to analyze. the determinants of FDI have faced identification problems, though researchers have managed to provide good insights on the issue. The theoretical literature also highlights the impact of FDI on the development of the host country through technological spillovers and the increased availability of new inputs to both the multinational firm and to other local firms
This chapter studies the impact on the Costa Rican economy of Intel’s decision to move into that country
A Case Study of Foreign Direct Investment in Central America.
The attraction of foreign direct investment (FDI) constitutes a fundamental element to support strategies that aim to achieve sustained economic growth in developing countries. This is because globalization and the attendant opening of the economies to competition require increased financial resources and technology, which would be impossible to obtain under a policy of autarky.1 Though relatively well-established principles exist to explain why a multinational company may decide to move into a specific country, each experience has its idiosyncratic elements from which both theorists and policymakers can learn important lessons. There is less consensus, however, on the potential positive or negative effects that FDI may have on the host economy, and on what factors determine these effects.
This chapter presents a case study of foreign direct investment (FDI) going into a small country. It analyzes the advent of Intel, manufacturer of microprocessors, to Costa Rica, a country that is very small indeed when compared with other potential locations for a company of that nature. The literature on FDI contains theoretical formulations on the factors that attract FDI and on policies oriented towards increasing FDI flows to a country.
2 There are also models of the effects that such investment has on the host country at both the micro- and macroeconomic levels. Recent attempts to use cross-country data to analyze. the determinants of FDI have faced identification problems, though researchers have managed to provide good insights on the issue. The theoretical literature also highlights the impact of FDI on the development of the host country through technological spillovers and the increased availability of new inputs to both the multinational firm and to other local firms
This chapter studies the impact on the Costa Rican economy of Intel’s decision to move into that country