The Impact of Foreign Direct Investment

Abstract

The increasingly globalized business environment is demonstrated by the rising levels of international business and, more specifically, of foreign direct investment (FDI). The importance of FDI is primarily captured by the link between the level of social welfare in the host country and the externalities arising from the activity of multinational enterprises (MNEs). As these externalities can be both positive and negative, the factors conditioning the former have been a major concern of academic literature.