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Foreign Direct Investment

The great promise of foreign direct investment (FDI) by multinational corporations is that capital will stimulate dynamic growth. Beyond boosting income and employment, the hope is that manufacturing FDI will bring knowledge spillovers that build the skill and technological capacities of local firms, catalyzing broad-based economic growth. In addition, environmental spillovers that will mitigate the domestic ecological impacts of industrial transformation.

GDAE's extensive work, much of it in partnership with researchers in developing countries, demonstrates that the promise often goes unfulfilled, that foreign capital "crowds out" domestic capital, and that virtuous spillovers are more limited than one would hope. GDAE
examines the ways in which trade and investment agreements contribute to this problem by limiting the "policy space" for governments to better direct FDI to enhance sustainable and dynamic development. GDAE is also examining the economic impacts of foreign investment in extractive industries, with a 2010 assessment of Goldcorp’s Marlin mine in Guatemala.


No Voy en Tren: Uruguay y las perspectivas de un TLC
con Estados Unidos (2000-2010)
(Not On Board: Uruguay and the Prospects for a Free Trade Agreement with the United States, 2000-2010)
By Roberto Porzecanski
Debate (Random House Mondadori), June 2010

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


The Enclave Economy: Foreign Investment and Sustainable Development in Mexico's Silicon Valley
Kevin P. Gallagher and Lyuba Zarsky, The MIT Press, 2007.
In this detailed study of the impacts of high-tech foreign investment in Mexico, Gallagher and Zarsky show the limited development impacts from Mexico's economic policies.

International Investment for Sustainable Development
Lyuba Zarsky, editor, Earthscan, 2004.

In-Depth Articles and Reports:

Sustaining Development: Extractive Industries and Local Communities, Lyuba Zarsky, World Politics Review, August 6, 2013

Can Extractive Industries Promote Sustainable Development? A Net Benefits Framework and a Case Study of the Marlin Mine in Guatemala, Lyuba Zarsky and Leonardo Stanley, The Journal of Environment Development (June 2013) vol. 22 no. 2, 131-154

Searching for Gold in the Highlands of Guatemala: Economic Benefits and Environmental Risks of the Marlin Mine, Lyuba Zarsky and Leonardo Stanley, GDAE Report, September 2011

Climate-Resilient Industrial Development Paths: Design Principles and Alternative Models, Lyuba Zarsky, GDAE Working Paper 10-01  February 2010

Global Crisis in Need of Global Solutions, Kevin P. Gallagher, in Latin American Trade Network LATN Nexos 7, March 2009

Policies for Industrial Learning in China and Mexico, Kevin P. Gallagher and Mehdi Shafaeddin, RIS Discussion Paper #150, February 2009

Missing Links: Foreign Investment and Industrial Development in Costa Rica and Mexico, Eva A. Paus & Kevin P. Gallagher, St Comp Int Dev (2008) 43:53–80

FDI Spillovers and Sustainable Industrial Development: Evidence from U.S. Firms in Mexico’s Silicon Valley, Lyuba Zarsky, Kevin Gallagher. Working Group Discussion Paper DP18, April 2008

Economic Reform and Foreign Investment in Latin America: A Critical Assessment, Kevin P. Gallagher and Roberto Porzecanski, Progress in Development Studies 2007. (NOTICE: Author Posting. (c) Progress in Development Studies. This article may be used for research, teaching, and private study purposes. Any substantial or systematic reproduction, re-distribution, re-selling, loan or sub-licensing, systematic supply or distribution in any form to anyone is expressly forbidden.)

Searching for the Holy Grail: Making FDI Work for Sustainable Development, Lyuba Zarsky and Kevin P. Gallagher, WWF Analytical Paper, March 2003.

Opinion Articles and Policy Briefs:

Stop Private Firms Exploiting Poor States by Kevin Gallagher, The Guardian, February 5, 2010

The Li of Bolivia’s land, The Guardian, July 9, 2009 - Bolivia's vast lithium riches could bring the country out of poverty – but success depends on working with foreign firms.

Multinationals and the “Maquila Mindset” in Mexico’s Silicon Valley, Lyuba Zarsky and Kevin P. Gallagher, Americas Program Policy Brief, Interhemispheric Resource Center, October 12, 2007

NAFTA, Foreign Direct Investment, and Development in Mexico, by Kevin P. Gallagher and Lyuba Zarsky, Americas Program Policy Brief, Interhemispheric Resource Center, January 28, 2004

Working Group on Development and Environment in the Americas:

The Working Group on Development and Environment in the Americas was founded in 2004 and contributes empirical research and policy analysis to the ongoing policy debates on national economic development strategies and international trade. See Working Group page for discussion papers on foreign investment in Latin America.

Foreign Investment and Sustainable Development: Lessons from the Americas, GDAE Working Group Report, May 2008. (available in English, Spanish, and Portuguese)

The Global Development and Environment Institute’s Globalization and Sustainable Development Program examines the economic, social and environmental impacts of economic integration in developing countries, with a particular emphasis on the WTO and NAFTA's lessons for trade and development policy. The goal of the program is to identify policies and international agreements that foster sustainable development.

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