Foreign Direct Investment, Democracy, and Development

The author examines democracy's effects on economic growth and considers the claim that foreign capital has a detrimental effect on democracy to show that FDI in fact plays a supporting role for democracy and creates higher growth rates than domestic capital. From these results the author suggests that policy makers should seek to encourage globalization by ensuring open access to products from poorer countries, encouraging private investment within poorer countries and that such countries should concentrate on building up human and institutional capital to attract investment.

The effects of globalization on economy and society are highly contested subjects in academic and political arenas. This study brings an empirical perspective to the crucially important arguments that encapsulate the major debates in this area. Using quantitative data, this book addresses the shape and degree of internationalisation by focussing on the impact of Foreign Direct Investment (FDI) and democracy on economic development and the effects of economic internationalisation on democracy.

The author examines democracy's effects on economic growth and considers the claim that foreign capital has a detrimental effect on democracy to show that FDI in fact plays a supporting role for democracy and creates higher growth rates than domestic capital. From these results the author suggests that policy makers should seek to encourage globalization by ensuring open access to products from poorer countries, encouraging private investment within poorer countries and that such countries should concentrate on building up human and institutional capital to attract investment.

Indra de Soysa is Senior Research Fellow at the Center for Development Research, University of Bonn, Germany and leads a research group on 'Democracy, Rule of Law and Governance'. He has recently published articles in the Journal of Conflict Resolution, American Sociological Review, the Journal of Peace Research, and Global Environmental Politics and a number of book chapters in edited volumes. His research primarily centres on such issues as democratisation, political economy of violence and the effects of globalization on the economy and society.