In This Review

Foreign Direct Investment and Development: Reevaluating Policies for Developed and Developing
Foreign Direct Investment and Development: Reevaluating Policies for Developed and Developing
By Theodore H. Moran
Peterson Institute, 2011, 182 pp

Multinational corporations arouse high emotions, whether they are seen as exporters of jobs, exploiters of workers, or transmitters (or withholders) of valuable technology. Moran reviews and synthesizes the latest research on the various impacts of the foreign direct investment made by multinationals in developing countries. Few sweeping generalizations hold up. The circumstances surrounding particular investments are of paramount importance and are usually influenced by the policies and negotiating skills of the governments in the target countries. There are important differences among various forms of foreign investment -- in natural resources, infrastructure, manufacturing, and services. At least one generalization does seem to hold, although perhaps not universally: investment abroad by U.S.-based multinationals does not reduce employment in the United States. On the contrary, it generally supports employment at home. Moran believes much of the available research on multinationals is inadequate. He strongly urges supplementing cross-country regression analysis with case studies, including comparative case studies, which yield deeper insights into what is actually happening.