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Investment Generation Toolkit

Module 1: About FDI




This module sets the stage for the Investment Promotion Toolkit by providing an overview of the nature, cause, effects, and benefits of foreign direct investment (FDI). In the FDI arena, the primary actors are the transnational corporations (TNCs) that make overseas investments and the locations that serve as hosts for these investments. In many cases, locations are represented and marketed by investment promotion intermediaries (IPIs) that work to bring companies to their locations. In other words, the TNC, in seeking out a good site to do business, is the "client" of the IPI, and the IPI sells its location. As either an employee of an IPI or someone involved in another aspect of the business of investment promotion, it is vital that you have a clear understanding of your client. This understanding requires an appreciation of the history, current and past trends, and site-selection factors of FDI.

You must also understand the other side of the FDI equation: the potential your location holds as a host to investment. You must understand how a country's level of economic development and its national economic policies affect the size and types of FDI a location can attract. Because FDI is not a goal in itself, but only one way to further economic development, you must have a clear understanding of what types of FDI are right for your country and of the benefits offered by FDI, how these benefits can be maximized, and the government policies that are most conducive to attracting FDI. This module provides a general foundation upon which effective investment promotion strategies can be built. It is not an exhaustive study of FDI, but rather an introduction to many of the issues central to your work

Lessons from this module:

Upon completing this module, the reader will have gained a general understanding of:

  • Why companies invest abroad
  • Different types of FDI
  • How FDI trends have changed over time
  • Site selection processes and the factors sought by TNCs
  • Economic effects associated with FDI
  • Importance of an open and transparent economic environment
  • Increasingly competitive environment for investment promotion  


  About the steps: