How Foreign Investment can Facilitate Development, by Syed Mohammad Ali
Thursday, May 5, 2005
Studies have shown that the poor end up paying more for banking, electricity, water and health care. An article in the Harvard Business Review argues that multinational companies in social service delivery areas could help create better quality of care Many development thinkers now agree that foreign investment can be a major building block in promoting development goals. Yet creating models for investment in markets where the majority of the people are poor is not easy. Channelling foreign investments to improve the lives of the poor requires multidimensional efforts by a range of stakeholders, counterbalancing the urge for maximising profits with the need to achieve benevolent growth.
The conventional argument is that foreign investment can help poor countries acquire technology, management skills and exposure to market mechanisms needed to kick-start economic development. Developing countries are, therefore, encouraged by international financial institutions to provide the legal and other institutions and physical infrastructure necessary to attract foreign investment. Yet, many development scholars have noted that the contribution of foreign direct investments and multinational activities in helping develop poor countries remains quite limited, except in some resource-rich African and Asian countries, where too the ensuing benefits remain subject to debate. Rest of the story here.
Source: Daily Times Pakistan