Rethinking Foreign Investment for Sustainable Development: Lessons from Latin America

Rethinking Foreign Investment for Sustainable Development: Lessons from Latin America
Edited by Kevin P. Gallagher and Daniel Chudnovsky
Anthem Press, 2009.

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A series of essays critiquing foreign direct investment in Latin America. Analyzes the Latin American backlash against “Washington Consensus” policies. Draws lessons from Latin America that can be applied to foreign direct investment more generally.

After almost twenty-five years of experimenting with the neo-liberal economic reforms collectively known as “Washington Consensus” policies, Latin Americans are starting to re-assess the merits of these policies – at the voting booth. Many newly elected governments are beginning to scrutinize the role of foreign direct investment (FDI) in particular, and some nations have gone so far as to nationalize foreign firms. Without endorsing or condoning the actions taken by these governments, this volume demonstrates that it is quite rational for governments in the region to re-evaluate the role of FDI for their development paths. The great promise of FDI by multinational corporations is that capital will flow into your country and be a source of dynamic growth. Beyond boosting income and employment, the hope was that manufacturing FDI would bring knowledge spillovers that would build the skill and technological capacities of local firms, catalyzing broad-based economic growth; and environmental spillovers that would mitigate the domestic ecological impacts of industrial transformation. Consisting of country case studies and comparative analyses from Latin American and U.S.-based political economists, this volume finds that when FDI did materialize if often fell far short of generating the necessary linkages required to make FDI work for sustainable economic development.