Chap007 - Chapter 7 The Political Economy Of Foreign Direct...

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Chapter The Political Economy Of Foreign Direct Investment 7
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Case: FDI and the Irish miracle FDI in Ireland grew from $164m (1985) to $24b (2000) By 2000 two-thirds of Irelands top exporters were MNEs Reasons for Ireland’s success Member of EU (access to EU markets) Highly educated workforce Good infrastructure
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Political ideology and FDI Radical View Pragmatic Nationalism Free Market
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Radical view Marxist view, that MNE’s exploit less developed host countries Extract profits Give nothing of value in exchange Instrument of domination not development Keep less-developed countries relatively backward and dependent on capitalist nations for investment, jobs, and technology
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Radical view Radical view was popular (1945-80) among Communist countries (China, Cuba) Socialist countries in Africa Nationalistic countries (Iran, India)
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Radical view-short lived? By end 1980s radical view was in retreat Collapse of communism Bad economic performance of countries that embraced the radical view Strong economic performance of countries who embraced capitalism rather than the radical view
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Free market view . Nations specialize in goods and services that they can produce most efficiently Resource transfers benefit and strengthen the host country
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