Foreign Investment and Domestic Development: Multinationals and the State

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Foreign Investment and Domestic Development: Multinationals and the State
By Jenny Rebecca Kehl
Lynne Rienner, 2008
163 pp. $49.95

Foreign direct investment (FDI) is now generally acknowledged to contribute to the growth and development of receiver countries, albeit with occasional egregious exceptions. The political scientist Kehl here examines the influence of political institutions on the flow of benefits, direct and indirect, to developing-country hosts. Although her reach is broader, the examination concentrates on six case studies: Chile, India, Kenya, Malaysia, Mexico, and Nigeria each warrant a chapter. Chile, Malaysia, Mexico, and, more recently, India have been very successful at attracting and retaining FDI, whereas Kenya and Nigeria (apart from their oil sectors) have experienced divestiture. General Motors operates plants in all six countries, and within Kehl's studies, special attention is given to this troubled global firm. Institutional capacity in the host country, not surprisingly, plays a key role both in enlarging the benefits of FDI to the host country and in attracting and retaining investment. Democracies do better, on average, than autocratic regimes at enhancing the benefits.

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