Foreign Direct Investment Can Both Damage and Facilitate Economic Growth in the World's Poorest Regions

In this article I will explain the concept that foreign direct investment (FDI) may inhibit and promote economic growth in the world's poorest regions. In doing so, it will pay special attention to the current trends in global economic integration. We will explain the potential dual impact of FDI, including the impact of certain events, such as the long-term and short-term impact of FDI, the impact of day-to-day operations, and financial crisis in September 2008 . This document first defines important terms being discussed.

There are several factors that can contribute to the development of economic globalization. Francis Fukuyama (1992), including regional integration, trade liberalization, privatization and deregulation, and direct investment, breakthrough the domestic barriers by creating a single integrated world market is a major issue in capital mobility, foreign direct The importance of multinational corporations (TNC) claiming to promote growth investment and increase, (Fukuyama, 1992). Therefore, we can not deny the central role of multinationals in the process of economic globalization. These factors will be discussed later.

Modern economic theory and foreign direct investment by multinational corporations include internalization theory and the OLI paradigm of John Dunning. Dunning is known for his research in international direct investment economics and multinational companies. In particular, his OLI paradigm remains a major theoretical contribution to the study of international business themes. Hymer and Dunning are founding partners of the international business and are considered to be specialized fields. All companies wanting to go internationally have a common purpose; a desire to increase their economic value when engaged in international trade transactions. To achieve this goal, each company needs to develop personal strategies and approaches to maximize value, reduce costs, and increase profits. The company's value creation is the difference between V (the value of the product being sold) and C (the manufacturing cost of each product being sold).

G. Jayachandran mentioned the relationship of trade, foreign direct investment (FDI), and India's economic growth from 1970 to 2007. Economic growth of documentary trade and foreign direct investment (FDI) usually shows a positive growth relationship between trade and foreign direct investment. However, there are few studies directly testing the causal relationship of the three variables. In theory, economic growth can cause inflows of foreign direct investment, trade and foreign direct investment can also stimulate economic growth. This paper adds literature by analyzing the existence and nature of these causal relationships. The current analysis focuses on India, with the largest increase in foreign direct investment. The analysis shows that there is a long-term equilibrium relationship. The result of the Granger causality test shows that there is a causal relationship between the test variables. Under open policy, economic growth, trade and foreign direct investment seem to complement one another.