EMPLOYMENT AND FOREIGN-INVESTMENT - POLICY OPTIONS FOR DEVELOPING-COUNTRIES

The recent rapid growth of transnational corporations (TNCs) has been most striking in newly industrializing countries, virtually ignoring l east developed countries. Today developing countries generally must se cure their comparative advantage by offering TNCs the skilled labour, reliable infrastructure and local suppliers required by competitive, h igh-technology activities. The author examines how developing countrie s can enhance employment and skill creation through foreign direct inv estment and analyses the nature of its effects on employment in host e conomies. Drawing on the experience of east Asian newly industrialized economies, he argues that it is possible to maximize the benefits and mitigate the negative effects of foreign investment through appropria te policies.