Subsidizing Multinational Corporations: Is That a Development Policy?
نویسنده
چکیده
Foreign direct investment (FDI) is a major factor in the globalization scenario. However, contrary to the core pro-market tenets of the economic school supporting globalization, the flows of FDI have grown side by side with a whole array of FDI subsidies dispensed by the “visible hand” of the state. Scholars have studied the links between FDI and economic growth and between subsidies and actual flows of FDI, but scant attention has been paid to the links between subsidized FDI and development. This paper tries to fill that void by looking at the consequences of FDI subsidies for the fiscal deficit, competitiveness, social progress, democracy, governance, and cultural assets critical for development. Policy documents and the academic literature that touches tangentially upon some of these links show that subsidizing FDI has a negative impact on these development variables. I also consider policy issues related to development.
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