Impacts of Foreign Direct Investment on Poverty （外国直接投资对贫困的影响）.pdfVIP

Impacts of Foreign Direct Investment on Poverty Reduction in Vietnam Tran Trong Hung IDS Program, GRIPS 1. Introduction Foreign direct investment (FDI) has been recognized as an important resource for economic development. Many people argue that the flows of FDI could fill the gap between desired investment and domestically mobilized saving (Todaro and Smith, 2003, Hayami, 2001). It also may increase tax revenues and improve management, technology, as well as labor skills in host countries (Todaro and Smith, 2003, Hayami, 2001). Additionally, FDI may help the host country to break out of the vicious cycle of underdevelopment (Hayami, 2001). Many scholars widely believe that the benefits accrued from FDI may include the acquisition of new technology, employment creation, human capital development, contribution to international trade integration, enhancing domestic investment, and increasing tax revenue generated by FDI (Jenkins and Thomas, 2002; World Bank, 2000). All of these benefits are expected to contribute to higher economic and employment growth which is an effective tool for achieving improvement in the reduction of poverty. However, the impacts of FDI on poverty depend on many factors including the host countries’ institutions and policies, the quality of the labor market, the economic environment, and the investment itself (Mayne, 1997). 1 Global trends in FDI flows to developing countries have increased dramatically in both quality and quantity. FDI flows reached $70 billion in 1993 (Nair-Reichert and Weinhold, 2001) and nearly $180 billion in 1999 (GDF, 2003). According to Global