The Economic and Social Impacts to India and Its Citizens from Inward Foreign Direct Investment



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2.2: Defining Globalisation


Held et al (1999, p.2) describe globalisation as

…the widening, deepening, and speeding up of worldwide interconnectedness in all aspects of contemporary social life.

Despite the prevalence of discussions concerning globalisation, there is widespread disagreement as to its definition, prevalence, and impact (Caselli, 2012; Farnsworth, 2004; Yeates, 1999). Definitions of globalisation often refer to a shrinking of time and space where social phenomena in one part of the world are closely connected with social phenomena in other parts of the world (Deacon, 2007).

Globalisation involves a number of dimensions including the economic, political, social, cultural and environmental (Deacon, 2007; Weiss, 2013). However, as political and economic aspects are most relevant to discussions concerning FDI, the following subsections will focus on these two aspects.


2.2.1: Economic globalisation


Economic globalisation refers to the increasing interdependence of national economies through the transnational movements of goods, services, technology and capital (Joshi, 2009). It also concerns the revolutionary developments in information, communication, and technology (ICT) (Lipsey, 1997) as well as advancements in finance that have enabled the formation of a global economy (Strange, 1991; O’Brien and Williams, 2007, 2013). Khor (2000, p. 3) argues that the most important aspects of economic globalisation are the removal of national economic barriers; the increasing volume and speed of international trade, financial and production activities and the growing power of transnational corporations and international financial institutions in these processes. Although economic globalisation is an expansive topic, this analysis will focus more on the mechanics of FDI; it will help to explain how FDI circulates the globe and how investors in one country can create investment in other host countries with the expansive reach and volume of investment that occurs today. The following subsections will examine aspects that are central to FDI: multinational corporations and their growing power, transnational production, including the factors that have enabled and facilitated it, and the emergence of global value chains.

2.2.1.1: Multinational corporations within the global economy


We cannot understand economic globalisation without a discussion of transnational corporations (TNCs) (Forsgren, 2013; Gilpin, 2001; Stiglitz, 2006;; Stopford and Strange, 1991; Bakan, 2004). An iconic image of globalisation (Korten, 1995), TNCs are instrumental to the global economy, the driving force behind transnational production (Forsgren, 2013; Sklair, 2012; Hymer, 1976, 1979), and account for the majority of the world’s trade with much of it resulting from internal trade or movement of goods and services between units of the same corporation (UNCTAD, 2006; Forsgren, 2013; O’Brien and Williams, 2013).

TNCs are the largest source of FDI (OECD, 2008; Forsgren, 2013). The definition of FDI will be explored further in detail below; for now, it is sufficient to understand that TNCs often utilise FDI, a type of international capital flow, to conduct investment activities and/or manage subsidiaries in host countries outside their home base (Forsgren, 2013; Dunning, 1997b, 2002, 2008; O’Brien and Williams, 2007, 2013; Held et al, 1999). TNCs are both vilified and respected (Stiglitz, 2006) and, it can be argued, can undermine state autonomy due to their economic and political power (Sklair, 2012; Coen, 1998; Korten, 1995; Madely, 1999).

Multinational Corporations (MNCs) or TNCs are terms that are often used interchangeably in globalisation discourse and refer to a company which produces goods or markets its services in more than one country (Forsgren, 2013; O’Brien and Williams, 2013; Held et al, 1999). There is some discussion about the relative usefulness of the term MNC versus TNC,1 but these debates are of limited relevance here. In this thesis I will use the term TNC.

The realm of TNCs is large, diverse, and expanding (UNCTAD, 2007; Monbiot, 2000; Gilpin, 2001; Forsgren, 2013; Sklair, 2012). Since the 1980s FDI has been growing faster than international trade precisely because TNCs are choosing to invest in other countries rather than producing goods and services in their home countries and exporting to foreign ones (Holden, 2014). The universe of TNCs is comprised of firms from both developed and, increasingly, developing countries (UNCTAD, 2007; 2013). As mentioned previously, developing countries attracted 54 per cent of the global FDI in 2013 and one third of the global FDI for 2012 was from developing countries (UNCTAD, 2013; 2014). Much of the increase of FDI to developing countries and least developed countries (LDCs) was a result of investment by TNCs from developing countries or South to South investment (UNCTAD, 2013). Figure 1 illustrates the increasing global levels of inward FDI flows to developing countries. Figure 2 depicts the growing outward FDI from developing countries.



Figure 1: Inward FDI flows, annual, 1990-2013

Source: UNCTAD Stat: http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx?sCS_ChosenLang=en [Accessed May 16, 2015]



Figure 2: Outward FDI, annual, 1985-2013

Source: UNCTAD Stat: http://unctadstat.unctad.org/wds/ReportFolders/reportFolders.aspx?sCS_ChosenLang=en [Accessed May 16, 2015]

TNCs are held accountable for being the major driver of globalisation and responsible for its failures and ills as well as its successes (Forsgren, 2013; Stiglitz, 2006). The risks and benefits of FDI and TNCs are explored further in section 2.4. On the one hand, TNCs are accredited for bringing the benefits of globalisation to developing countries (OECD, 2002; 2008; O’Brien and Williams, 2013). TNCs are successful because they possess certain characteristics that give them a competitive advantage that they can then exploit in the global markets (Dunning, 2002; Porter, 1990; Forsgren, 2013). These assets may take the form of advanced technologies, research and development capabilities, managerial and organisational expertise and innovative products and services (Dunning, 2002; Porter, 1990; O’Brien and Williams, 2007, 2013). TNCs can bring these needed assets to developing countries as well as provide jobs to their citizens and revenue in the form of taxes to their economies (Farnsworth, 2000, 2004, 2010; Herzer, 2012). Developing countries need investment to provide the aforementioned assets and TNCs house them in plenty and, simultaneously, TNCs want to cut cost and the establishment of subsidiaries in developing countries can help achieve this goal (Farnsworth, 2008; Thomas, 2011; Herzer, 2012; Forsgren, 2013). In addition, TNCs continually seek new markets and consumers may benefit from wider consumer choice and superior products and services (Pradhan and Abraham, 2005; Lawrence, 2011).

On the other hand, TNCs are criticised as being profit driven exploiters of developing countries and of causing great harm (Sklair, 2012; Jenkins, 1987; Bakan, 2004; Richter, 2001; Madeley, 1999; Korten, 1995). Businesses pursue profits and TNCs are accused of going to great lengths to cut costs and increase profit margins by exploiting labour and driving down wages, providing adverse working conditions, and polluting the environment (Haynes et al, 2013; Farnsworth, 2004; Stiglitz, 2006; Madeley, 1999; Korten, 1995; Bakan, 2004). Corporate harm as well as corporate social responsibility (CSR) will be discussed further in the next chapter.

TNCs are hubs of power and economic wealth (Forsgren, 2013; Madeley, 1999; Stiglitz, 2006; Bakan, 2004; Korten, 1995; Fuchs, 2005). Their economic wealth often surpasses developing countries’ gross domestic product (GDP: the sum total of goods and services produced by a country), as Stiglitz (2006, p.187) emphasises:

These companies are richer than most countries in the developing world. In 2004, the revenues of U.S. car company General Motors were $191.4 billion, greater than the GDP of more than 148 countries. In its fiscal year ending 2005, US retailer Walmart’s revenues were $285.2 billion, larger than the combined GDP of sub-Saharan Africa.

TNCs are not only wealthy but politically powerful and have the ability to shape national and international policy debates (Hill et al, 2013; Sklair, 2001, 2012; Vogel, 1996; Farnsworth, 2004, 2010; Fuchs, 2005). The power of TNCs to influence policy decision making as well as the dynamics of power between the state and the firm will be explored in greater detail in the next chapter. For now, it will be helpful to understand that as TNCs invest in developing countries; this creates a growing interdependence between the two resulting in a new trend in diplomacy (Strange, 1991; Stopford and Strange, 1991; Sklair, 2002, 2012). Strange (1994) argues that states must now negotiate with firms and firms now have to become much more state-like in their dealings with national governments. Strange (1994) argues that firms have become more involved with governments and policy making as both have come to recognise the increased dependence of the state on the scarce resources controlled by firms.

Investment via TNCs is only part of the economic globalisation story, of course. Also important are changes in production. The following subsection will describe in more detail the changes in production.


2.2.1.2: Transnational production and the global value chain


TNCs are able to produce a wide range of goods and services in host countries around the world through the process of transnational production (Forsgren, 2013; Jenkins, 1987; Kobrin, 1997; O’Brien and Williams, 2007). 2013). The transnational production system is a complex one where workers and workplaces worldwide are integrated into a heterogeneous mixture of local, national, regional and global systems of labour, production and reproduction (Gereffi and Korzeniewicz, 1994; Barndt, 2002; Rivoli, 2005; Yeates, 2012; Truong 1996). O’Brien and Williams (2004, 2013) observe that there are essentially two routes to try and investigate the global production structure. One way is to focus on the TNC and the second is to direct attention to the range of activities that comprise the final product or service: global value chains (GVCs). The GVC is the full range of activities that firms and workers do to bring a final product from its conception to the end result (UNCTAD, 2013; Gereffi et al, 2005; Nathan and Kalpana, 2007). Although global value chains are often associated with manufactured products, the transnational production process incorporates a vast range of products and services from business and information processing (Nathan and Kalpana, 2007) to reproductive services such as paid and unpaid care (Yeates, 2012) and domestic and sexual services (Truong, 1996). In UNCTAD’s World Investment Report (2013), a section was dedicated to the widespread occurrence of transnational production involving GVCs. UNCTAD (2013) estimates that 60% of global trade, which is more than US $20 trillion in value, is the result of trade in intermediate goods and services at various stages of production within TNC coordinated GVC networks.

As explained above TNCs locate different parts of their production operation in various host countries (Kalemi-Ozcan and Sanchez, 2013; Nunnenkamp and Spatz, 2004; Moran et al, 2005; Forsgren, 2013; Dunning, 1997b, 2002, 2008). They can then proceed to conduct intra-firm trade to link the production facilities and components for final delivery of service or assembly of production (Nathan and Kaplana, 2007). This type of transnational production occurs, for example, when automobile parts are shipped by a subsidiary in one country for assembly by the same firm or parent company in another host country. However, as Gereffi et al (2005) and Nathan and Kalpana (2007) argue, increasingly production operations are not only divided between locations but also between firms. TNCs fracture the production process into smaller pieces through various types of contractual arrangements with suppliers outside the firm (Gereffi et al, 2005; Nathan and Kalpana, 2007). Using the same example above, in this scenario, a TNC may source automobile parts from several different firms outside their subsidiary operations and link the components via inter-firm and inter-industry transactions. These suppliers and/or production units within GVCs can be arranged in sequential chains or aligned in more complex arrangements and can be global, regional, or span across only two countries (UNCTAD, 2013). This type of production results in numerous layers of subcontracting units as the product is further and further outsourced or subcontracted (Gereffi et al, 2005; Nathan and Kalpana, 2007; Hopkins, 1994; Gibbon and Ponte, 2005). Nathan and Kalpana (2007, p.2) explain that the trend of GVCs is driven by cost cutting and the increasing competitiveness between TNCs to make higher returns which can be achieved through outsourcing.

UNCTAD (2013) warns that participation in GVC transnational production can bring a mixed bag of costs and benefits that are heavily dependent upon where in the value chain the country is participating most (UNCTAD, 2013). Developing countries can get locked into lower levels of GVCs and because the nature of these production systems are very fragmented, it can difficult for units and sectors to progress and transition up the value chain (UNCTAD, 2013). Lower levels of GVCs are linked to insecure and poor working conditions (UNCTAD, 2013). This discussion of GVCs is especially important when we consider countries such as India where industries such as garments are incorporated into lower levels of the supply chain and often involve production in home based units where working conditions are often exploitative. GVCs will be further explored in section 2.4.3 which involves employment conditions as well as in Chapter Three (3.5).

2.2.2: Political globalisation


Political globalisation involves the extension of political power and activity across the boundaries of the modern nation-state (Held et al, 1999, p.49). International governmental organisations (IGOs) such as the International Monetary Fund (IMF), World Bank, World Trade Organization (WTO), and the United Nations (UN) are the pillars of political globalisation, the source of global power and global governance, and have influence on the decision making of nation-states (Weiss, 2013; Holden, 2014; Stiglitz, 2002; Coyle, 1999; Diehl, 1997). Their economic prescriptions, economic neoliberalism, is a key aspect of globalisation (Chang, 2014; Cox, 1994; Stiglitz, 2002; 2006; Gill, 1995; Peet, 2003). These attributes of globalisation—IGOs and economic neoliberalism— have promoted the circulation of FDI to developing countries (Marshall, 1996; Gill and Law, 1989; Chang and Grabel, 2004; O’Brien and Williams, 2013). As explored in the previous section, advances in transnational production denote what is possible but political decisions are the driving force behind the liberalisation of economies and enticement of foreign investment (Chang and Grabel, 2004; Chang, 2014; Khor, 2000).

Researchers such as Gill (1995), Helleiner (1994), Peet (2003), Cox (1994), and Wade (2002) discuss the ways in which the governance of the global political economy via IGOs is framed and endorsed by an unbridled version of economic liberalism known as neoliberalism. Neoliberalism is rooted in the economic liberal perspective which promotes the power of the market and its ability to self-regulate (Holden, 2014; Stiglitz, 2002, Coyle, 1999; Peet, 2003). The economic crux of the liberal perspective lies within the trade theory of comparative advantage or comparative costs which was developed in the 19th century by Adam Smith (Holden, 2014; Chang, 2014; Gilpin, 2001; Stiglitz, 2002; Coyle, 1999). O’Brien and Williams (2007, p.142) summarize the concept of comparative advantage:

Stated simply the theory of comparative advantage shows that if a country specializes in the production of those goods and services in which it is relatively efficient (or alternatively, relatively less efficient) compared to its competitors it will be better off. Countries would improve their economic growth, become more stable, powerful and efficient since they would be specializing in the production of goods and services in which they were the most efficient producers and enabling their consumers to buy foreign goods at the lowest prices.

According to the liberal economic perspective, government non-interference and free trade of goods and services which represent the country’s comparative advantage are promoted as the best and most efficient formula for development (Coyle, 1999; Gilpin, 2001; Peet, 2003; O’Brien and Williams, 2007, 2013; Holden, 2014).

There is, however, a wide spectrum for economic liberal ideology with rigid free market ideology, neoliberalism, on one end of the spectrum and more temperate versions where a degree of intervention is accepted to correct for market failures on the other end, however, both ends are economic liberalism as they support the power of open markets (Chang, 2007, 2014; Stiglitz, 2006; Coyle, 1999; Gilpin, 2001; Gill, 1995). The dynamics between social welfare and neoliberalism will be explored further in the proceeding chapter (section 3.6).

Since their inception, the IMF and the World Bank targeted developing countries to assist with their economic development (Korten, 1995; Hale et al, 2013). Excessive lending to developing countries from the Bank continued in a standard and orderly way until the 1980s when the level of debt plus rising interest rates coupled with unstable economies in many of these countries, made default on the loans look unavoidable (Stiglitz, 2002; Peet, 2003; Korten, 1995; Chang and Grabel, 2004). In response to the crisis, the World Bank and the IMF stepped in and created financial settlements for bankrupt countries called structural adjustment programs (SAPs) (O’Brien and Williams, 2013; Stiglitz, 2002; 2006; Chang, 2003, 2014; Gore, 2000). SAPs were tailored policy prescriptions for individual countries and called for massive changes to pre-existing economic policies. Policy changes involved cutting public spending, liberalising national economies and reducing restrictions and tariffs on both imports and exports thereby providing incentives to attract foreign investors (Chang, 2003, 2014; Stiglitz, 2002; Wade, 2002; Rodrik, 1990; Gore, 2000). These policy demands became part of a broader policy framework known as the Washington Consensus which emphasised the downscaling of the government, deregulation, privatisation (transfer of public sector enterprises to the private sector) and rapid liberalisation (Rodrik, 1990; Gore, 2000; Stiglitz, 2004, 2006).

The Washington Consensus and neoliberal ideology both strongly advocate that developing countries create an attractive environment for foreign investment as this is purported to be crucial for economic growth (Cook and Kilpatrick, 1988; Khor, 2000; Gilpin, 2001; Stiglitz, 2002). This promotion of FDI occurs within and from multilateral organisations such as The Organisation for Economic Co-Operation and Development (OECD), and the WTO (Hale et al, 2013). The WTO, for example, can enforce the removal of controls on TNC activities for member countries (Held et al, 1999; Holden, 2014; Moran, 1990; Graham, 1997). The WTO’s Agreement on Trade Related Investment Measures (TRIMS) restricts the ability of national governments to place performance requirements on TNCs or require foreign enterprises to purchase certain quantities of input supplies from local sources (Hale et al, 2013; Moran, 1990; Stiglitz, 2006; Holden 2014). The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS) is another example of investment protection for TNCs whereby minimum standards are enforced for forms of intellectual property such as copyright laws for medicines, for example (Holden, 2014; Gilpin, 2001). Both of these measures have large implications for developing countries within the WTO as they greatly hinder their ability to steer investment activity and exploit TNCs for their best interests. As will be explored in an upcoming empirical chapter (section 6.5.); TRIPS, for example, halted India’s ability to reverse engineer non-patented medication which has large ramifications for the country’s access to affordable medicine (Gopakumar, 2013).

Thus, a key aspect of political globalisation is the impetus for global cooperation, direction and synchronisation of national legislation concerning FDI and TNC activity (Sklair, 2012; Gill and Law, 1989; Held et al, 1999; Gilpin, 2001). Legislation concerning investment policies prior to the advocacy of neoliberalism and the Washington Consensus via the global political institutions was predominantly within the remit of the national domain of decision making as will be explored below (section 2.5) (Weiss, 2013; Gore, 2000; Helleiner, 1994; Chang and Grabel, 2004). With political globalisation, domestic investment measures became more open to global influence and scrutiny from IGOs (Hale et al, 2013; Weiss, 2013; Held et al., 1999; Holden, 2014; Gilpin, 2001; Chang and Grabel, 2004; Stiglitz, 2002, 2006). This outside influence and encroachment on national economic policy-making became an outlet of discontent for globalisation. Critics became concerned for the sovereignty of the nation state and the debates that ensued added to the larger discourses concerning the costs of globalisation, the likes of which will be explored next (O’Brien and Williams, 2013; Newell, 2002; Gilpin, 2001; Cox, 1994; Weiss, 1998).


2.2.3: The criticisms of globalisation and the impact on nation states, developing economies and the world’s poor


There is an assumption that globalisation and the spread of investment will lead to benefits to all but there are real harms involved in this process. An obvious drawback of globalisation is the corporate harm caused by TNCs. I will discuss the specifics of corporate harm in Chapter Three (section 3.3). Here the focus is on the broad literature that exposes the problems of globalisation, especially in relation to the world’s poor. In Joseph Stiglitz’s (2006) ‘Making Globalization Work’, he explores the widespread discontent and highlights several major problems that have resulted from globalisation. This section will briefly examine three key criticisms that have been made.

The first is the concern that globalisation is creating unbalanced outcomes in both developed and developing countries and the wealth created is not experienced by many, in particular by those most in need (Gilpin, 2001; Mittelmann, 2000; Stiglitz, 2002, 2006; Sklair, 2002; Newell, 2002). Income inequalities are growing in both developing and developed countries since the 1980s (Rodrik, 2011; Singer, 1999; Khor, 2000; Wade, 2002; Sklair, 2002). Newell (2002) emphasises the importance of investigating the impact of globalisation and poverty within developing contexts. The world’s poorest populations are often more vulnerable to the external shocks that globalisation brings and this consequence is regularly ignored within the wider globalisation debates (Newell, 2000; Hirway and Prabhu, 2012; Nathan and Kelkar, 2012; Mittelmann, 2000; Madeley, 1997; Dauvergne, 1999; Hoogvelt, 1997; Newell, 2002; Klein, 2001). Livelihoods within developing countries are often integrated into micro and macroeconomic institutions that are susceptible to market liberalisations and vulnerable to the wider changes in the trade, production and financial structures of globalisation (Hirway and Prabhu, 2012; Dauvergne, 1999; Hoogvelt, 1997; Mittelmann, 2000; Newell, 2000). This vulnerability to external global shocks has arguably increased and exacerbated inequalities and insecurities within poor populations in developing countries (Rodrik, 2011; Madeley, 1999; Sklair, 2002; Newell, 2002; Klein, 2001). A further criticism is that key global decisions regarding trade policies that directly impact the citizens of developing countries often take place within international forums where developing countries are poorly represented where decisions directly impacting the poor are often determined by global financial actors (Newell, 2002; Holden, 2014).

This leads to the second critique of globalisation; it has eroded countries’ autonomy in policy-making (Hale et al, 2013; Weiss, 2013; Wall, 2012; Strange, 1996; Gill, 1995; Cox, 1994). Globalisation literature is replete with debates concerning the political autonomy of the nation state in the face of powerful global bodies such as IGOs and transnational capital (Hale et al, 2013; Newell, 2002; Gilpin, 2001; Mittelmann, 2000; Strange, 1996; Held et al, 1999). One argument contends globalisation has resulted in the transformation of the state whereby its autonomy is reduced, confined and disciplined by transnational capital flows (O’Brien and Williams, 2013; Cerny, 1990; Cox, 1994; Mittleman, 2000). Cox (1994) argues that states have transformed from being guardians against outside global interference to mediators within the global political economy whereby power structures within the national government are reconfigured to suit the needs and requirements of the world economy. Newell (2002) goes further to observe that the power dynamic between the state and transnational capital flow is not as simple as capital’s structural dominance over the state, but rather, the two act in alliance. In this context, it is important to note the role that states themselves play in relinquishing capital controls or affording certain privileges and freedoms to transnational capital (Helleiner, 1994; Helleiner and Pagliari, 2011). That said, although some states may play a prominent role in constructing their position in the global economy, “the menu of policy choices available to governments is clearly more a la carte for some than others” and the varying flexibility is indicative of a North-South divide (Newell, 2002, p.2).

The third and last critique of globalisation to be examined here argues that the economic prescriptions of globalisation are inappropriate and unfair to many of the developing countries they have been forced upon (Rodrik, 2011; Stiglitz, 2002, 2006; Chang and Grabel, 2004; Chang, 2002, 2014). Globalisation is presented by some as an uncontrollable force whereby states have no option but to accommodate and adapt (Ohmae, 1999; Wriston, 1992). However, when globalisation is presented in this way, power and agency are removed and globalisation becomes apolitical, thus, states have to adapt to the rules of the game rather than direct them (Newell, 2002). Chang (2003, 2014), Stiglitz (2006) and Newell (2002) refer to the discourse of ‘there is no alternative’ or TINA which absolves state governments and IGOs of any blame for the consequences of ‘casino capitalism’ (Strange, 1996; McKenzie, 2011) whereby reckless investment and predatory currency speculation, for example, is something that is portrayed as uncontrollable.

Many are critical of the fact that the advanced industrial countries of today did not follow neoliberal policies when they were in earlier stages of development (List, 1841; Stiglitz; 2002, 2006; Chang, 2002, 2007, 2014; Rodrik, 2011; O’Brien and Williams, 2007, 2013). It is widely recognised that the wealthy nations achieved their economic success by keeping domestic economies more regulated or closed to global markets until such time that they could become competitive internationally (Stiglitz, 2002; 2006; Chang, 2002, 2007, 2014; O’Brien and Williams, 2007, 2013). Historically, protectionist policies, by providing the opportunity to develop economies of scale and domestic market stability, have been important and perhaps necessary components of government-led strategies of economic growth in countries such as Germany and the United States (O’Brien & Williams 2007, 2013). The implications for developing countries such as India are that by joining global institutions such as WTO they are effectively placed in a policy straightjacket and unable to pursue the economic policies that the now developed countries implemented to their advantage when in similar stages of development. Chang (2002, p.5) highlights the argument put forth by the nineteenth century German economist Friedrich List (1841, p.40) who wrote:

It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he has climbed up, in order to deprive others of the means of climbing up after him.

In other words, this argument holds, developed countries and IGOs are purposely making it difficult for developing countries to amass the wealth that they themselves now control (Chang, 2002, 2007, 2014).

It is important to note that the aforementioned criticisms of globalisation presented above tend to concentrate on the undermining of the national, political, and social institutions of developing countries by powerful global economic institutions. However, as Yeates (2001) highlights, another perspective on globalisation recognises the reciprocal influence of, for example, individual states, communities, and labour organisations on globalisation. Thus, as globalisation impacts developing countries, developing countries impact globalisation. Nation states, including developing ones, can be argued to be more than merely passive victims of global economic and political institutions (Khor, 2000). The complicated dynamics of power between nation states and global institutions, in particular TNCs, will be explored further in the next chapter.



Clearly, globalisation brings a range of disadvantages and benefits to nation states, communities and economies. As will be explored in the remainder of this chapter, in regards to FDI and its impact on developing countries, the drawbacks and benefits are context specific as well. The next section will deconstruct the definition of FDI and explore different types of investment that can have varying impacts on developing countries, communities, workers, and economies.


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