Foreign Direct Investment, Democracy, and Development: Assessing Contours, Correlates, and Concomitants of Globalization

Foreign Direct Investment, Democracy, and Development: Assessing Contours, Correlates, and Concomitants of Globalization

Foreign Direct Investment, Democracy, and Development: Assessing Contours, Correlates, and Concomitants of Globalization

Foreign Direct Investment, Democracy, and Development: Assessing Contours, Correlates, and Concomitants of Globalization

Synopsis

Using quantitative data, this book addresses the shape and degree of internationalization by focusing on the impact of foreign direct investment and democracy on economic development and the effects of economic internationalization on democracy.

Excerpt

This chapter explores the theoretical divisions between the liberal perspective and the neo-Marxist, dependency and world-systems perspectives on foreign capital and economic development. By and large, these two perspectives dominated the development debates of the past two decades, and strong echoes of these debates reverberate in the new debates between the optimists and pessimists on the future of globalization. This chapter explores the theoretical debates on both positions on the effects of foreign capital on economic growth, considering especially recent controversies that form the bases of the empirical analyses of the present study presented in Chapter 3. First, however, I trace the bases of the new arguments and link them to older theory.

The ideological barriers to North-South cooperation notwithstanding, the collapse of the East-West dimension of world politics offers reasons to be optimistic. There has been a dilution of nationalist and ideologically motivated economic policies in much of the developing world. in fact, there is an argument to be made that the pragmatism of much of the South may have much to do with the newfound pragmatism among the former socialist-communist states. the rise of the East Asian NICs from colonial status to economic power coupled with the success of many other states in Southeast Asia signaled the benefits of outward orientation, particularly export-led growth over import-substitution industrialization (ISI) (Waterbury, 1999). Today, many states are following more "orthodox" and "rational" paths to economic policymaking, given the apparent failure of isi (Maddison, 1989). the new policy mode is generally referred to as the "Washington Consensus," a large part of which is the call to finance development with fdi and liberalization of trade (Williamson, 1994).

The change from ideology to pragmatism was echoed early by the architect of China's successful market-based reforms, Deng Xiaoping, who made such statements as "no country can now develop by closing its doors …Isolation landed China in poverty, backwardness, and ignorance" and "I don't care if the cat is white or black as long as it catches mice" (quoted

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