Foreign investment and economic development in Asia

THE NEED FOR a comprehensive study on foreign private investment in Asia has been felt acutely not only by scholars but also by administrators and planners. To meet this long-felt need, this survey of foreign private investment is presented to the public.

In preparing this study the authors have been very conscious of the serious. limitations of the data. The analysis and the conclusions that they are presenting should not, therefore, be regarded as definitive and final. Much of what has been presented has remained speculative and partakes of the nature of hypo theses, rather than proven conclusions. This has been particularly so for the papers on basic policy issues. An attempt has been made in these papers to examine the relevance to developing Asian countries of the international ex perience in this field, as contained in various views, theories, and policy recom mendations currently being discussed in international forums. The possibility of divergence of views is naturally very great in this area. Nevertheless, what has come out forcefully from our study is that foreign investment is not an unmixed blessing and that the developing countries would do well not only to carefully examine the merits and demerits of foreign investment at the time of entry, case by case, but must also keep a constant vigilance over it to see if the objectives for which the entry was permitted are being achieved or not.

Where economic interests and ideological orientations differ fundamentally, as they do in the area of foreign investment, it is unlikely that a resolution of the diversity in views can be brought about completely. However, they can be narrowed down by field surveys and by collection of relevant factual infor mation. The authors of this volume felt very acutely the need for carrying out empirical case studies in order to provide an objective basis for the debate. Case studies are needed to obtain detailed information on motivations both of investors and host countries. Depth studies are required to identify and quantify the effects of foreign investment on employment, local industries, exports, imports, local money markets, domestic research and technological develop ment, training and skill formation in general. Such case studies would permit analysis of costs and benefits of particular investment projects and help bring to the surface complex problems that inhibit the best use of foreign capital. Lastly, the regional implications of these investments and policies, and the ends and means of regional or subregional cooperation could also be investigated. The present research effort has not succeeded in obtaining definitive policy conclusions on any of these problems