Direct Foreign Investment and Manufacturing for Export in Developing Countries: A Review of the Issues

  • Gerald K. Helleiner


The precarious condition of the global financial system has generated a wide range of suggestions for reform, and continuing advocacy of ‘adjustment’ for the developing countries. Among the most consistent instruments suggested for achieving the twin objectives of more stable development finance and structural adjustment in production is a quite traditional one: direct foreign investment. Too much reliance was placed upon debt finance in the 1970s, particularly short-term debt, the argument runs, a form that has proven highly unpredictable both in its servicing obligations and in its gross flow to the developing countries; its future is now very much in doubt, except for those few creditworthy countries who ‘underborrowed’ in the past (e. g. India, Malaysia), as commercial banks attempt to restructure their portfolios in response to the adverse experience of the post-1981 period. At the same time, the urgent need for key inputs of management and marketing skills, technology, and know-how in ‘nontraditional’ tradeable goods and services sectors — into which the balance of payments pressures of recent years are driving the developing countries — seem most readily available in the familiar and traditional ‘packaged’ form of direct foreign investment, however desirable it might be to ‘shop’ for individual components thereof in less desperate and more leisurely times.


Direct Foreign Investment Host Country Foreign Investment Direct Investment Foreign Firm 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Balassa, Bela et al. (1982) Development Strategies in Semi-Industrial Economies (World Bank, Johns Hopkins, Baltimore).Google Scholar
  2. Basile, Antoine and Dimitri Germides, (1984) Industry in Free Export-processing Zones ( OECD, Paris).Google Scholar
  3. Bennett, Douglas and Kenneth E. Sharpe (1979) ‘Transnational Corporations and the Political Economy of Export Promotion: The Case of the Mexican Automobile Industry’, International Organization, vol. 33, no. 2, Spring, pp. 177–201.CrossRefGoogle Scholar
  4. Bergsten, C. Fred (1974) ‘Coming Investment Wars?’, Foreign Affairs (October), pp. 135–52.Google Scholar
  5. Biggs, Margaret A. (1980) The Challenge: Adjust or Protect? North—South Institute, Ottawa.Google Scholar
  6. Casson, Mark (1979) Alternatives to the Multinational Enterprise ( London: Macmillan).Google Scholar
  7. Dudley, Leonard (1972) ‘Learning and Productivity Change in Metal Pro-ducts’, American Economic Review, vol. 62, no. 4 (September) pp. 662–9.Google Scholar
  8. Dunning, John H. (1981) International Production and the Multinational Enterprise (George Allen & Unwin).Google Scholar
  9. Glover, David (1983) Contract Farming and the Transnationals, PhD dissertation, University of Toronto.Google Scholar
  10. Group of Thirty (1984) Foreign Direct Investment, 1973–1987 (New York).Google Scholar
  11. Guisinger, Stephen (1985) Investment Incentives and Performance Requirements ( New York: Praeger).Google Scholar
  12. Helleiner, Gerald K. (1982) ‘International Trade Theory and Northern Protectionism Against Southern Manufactures’, in Gerald K. Helleiner (ed.), For Good or Evil, Economic Theory and North—South Negotiations (University of Toronto Press) pp. 47–61.Google Scholar
  13. Helleiner, Gerald K. (1983) ‘Direct Foreign Investment and Alternative Forms of External Non-Concessinal Finance for Developing Countries’, Seventh World Congress of the International Economic Association (Madrid), mimeo.Google Scholar
  14. Keesing, Donald B. (1983) ‘Linking up to Distant Markets: South to North Exports of Manufactured Consumer Goods’, American Economic Review, vol. 73, no. 2 (May) pp. 338–42.Google Scholar
  15. Krueger, Anne O. and Baran Tuncer (1982) ‘An Empirical Test of the Infant Industry Argument’, American Economic Review, vol. 72, no. 5, (December) pp. 1142–52.Google Scholar
  16. Lall, Sanjaya and Mohammad Sharif (1983) ‘Foreign Ownership and Export Performance in the Large Corporate Sector of India’, Journal of Development Studies, vol. 20, no. 1 (October) pp. 56–67.CrossRefGoogle Scholar
  17. Lavergne, Real P. and G. K. Helleiner (1985) ‘U.S. Transnational Corporations and the Structure of U.S. Trade Barriers: An Empirical Investigation’, in UNCTC, Transnational Corporations and International Trade: Selected Issues (New York) ST/CTC/54.Google Scholar
  18. Maex, Rudy (1983) ‘Employment and Multinationals in Asian Export Processing Zones’, Working Paper No. 26, Multinational Enterprises Programme (Geneva: International Labour Office ).Google Scholar
  19. McCulloch, Rachel and Robert F. Owen (1983) ‘Linking Negotiations on Trade and Foreign Direct Investment’, pp. 334–58, in C. P. Kindleberger and D. Audretsch (eds). The Multinational Corporation in the 1980s ( Cambridge: The MIT Press ).Google Scholar
  20. Nayyar, Deepak (1978) ‘Transnational Corporations and Manufactured Exports from Poor Countries’, Economic Journal, vol. 88, no. 1 (March) pp. 59–84.CrossRefGoogle Scholar
  21. Newfarmer, Richard (1983) ‘Multinationals and Marketplace Magic in the 1980s’, in C. P. Kindleberger and D. Audretsch (eds), The Multinational Corporation in the 1980s ( Cambridge: The MIT Press ) pp. 162–97.Google Scholar
  22. Oman, Charles (1983) New Forms of International Investment in Developing Countries (Paris: OECD, Development Centre).Google Scholar
  23. OECD (1983) Investing in Developing Countries (Paris).Google Scholar
  24. Radetzki, Marian (1982) ‘Has Political Risk Scared Mineral Investment Away from the Deposits in Developing Countries?’, World Development, vol. 10, no. 1 (January) pp. 39–48.CrossRefGoogle Scholar
  25. Reuber, Grant L. et al. (1973) Private Foreign Investment in Development ( Oxford: Clarendon Press, for OECD Paris).Google Scholar
  26. Safarian, A. E. (1983) ‘Trade-Related Investment Issues’, in William R. Cline (ed.), Trade Policy in the 1980s ( Washington: Institute for International Economics ) pp. 611–37.Google Scholar
  27. Stewart, Frances (1982) ‘Industrialization, Technical Change and the International Division of Labour’, in Gerald K. Helleiner, (ed.), For Good or Evil, Economic Theory and North-South Negotiations (Universitetsforlaget and University of Toronto Press).Google Scholar
  28. Streeten, Paul (1981) ‘Outward-Looking Industrialization and Trade Strategies’, Paper presented to the North-South Roundtable, Fourth Annual Session, Tokyo/Oiso.Google Scholar
  29. United Nations Centre on Transnational Corporations (UNCTC) (1983) Transnational Corporations in World Development, Third Survey (New York).Google Scholar
  30. United States International Trade Commission (USITC) (1984) Imports Under Items 806.30 and 807.00 of the Tariff Schedules of the United States 1979–82 USITC publication 1467 (Washington).Google Scholar
  31. Usher, Dan (1977) The Economics of Tax Incentives to Encourage Investment in Less Developed Countries’, Journal of Development Economics, vol. 4, no. 2 (June) pp. 119–48.CrossRefGoogle Scholar
  32. Vernon, Raymond (1982) ‘Codes on Transnationals: Ingredients for an Effective International Regime’, Harvard Business School, mimeo.Google Scholar
  33. Wells, L. T. (1983) Third World Multinationals (MIT Press).Google Scholar
  34. Williamson, Oliver E. (1975) Markets and Hierarchies, Analysis and Antitrust Implications: A Study in the Economics of Internal Organization ( New York: The Free Press).Google Scholar

Copyright information

© Sidney Dell 1988

Authors and Affiliations

  • Gerald K. Helleiner

There are no affiliations available

Personalised recommendations