Making the Most of FDI for Development:'New' Industrial Policy and FDI Deepening for Industrial Upgrading

Buzdugan, S ORCID: https://orcid.org/0000-0002-9679-1649 and Tuselmann, H (2018) Making the Most of FDI for Development:'New' Industrial Policy and FDI Deepening for Industrial Upgrading. Transnational Corporations, 25 (1). pp. 1-21. ISSN 1014-9562

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Abstract

This article examines the theoretical and empirical links between a new generation of industrial policy, which is rapidly emerging as a dominant paradigm in development economics, and foreign direct investment. It finds that thus far, the theoretical role of FDI in “new” industrial policy has been vague, despite openness to FDI being one of the characteristics which sets it apart from an 'old' generation of industrial policy which advocated protectionism. Based on primary and secondary research, the article argues that a set of interventions into the economies of low and lower-middle income countries combined with an in-depth understanding of the complex interactions involved in TNC subsidiary upgrading, the internationalisation processes within TNCs and TNC strategies and objectives on the part of policy makers, offers such countries the opportunity to maximise the benefits of FDI and move further up in global value chains.