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The United Nations 1999 World Investment Report defines FDI as ‘an investment involving a long term relationship and reflecting a lasting interest and control of a resident entity in one economy (foreign direct investor or parent enterprise) in an enterprise resident in an economy other than that of the foreign direct investor ( FDI enterprise, affiliate enterprise or foreign affiliate).

In the recent years, Foreign Direct Investment (FDI) policies have become one of the central economic policies for the developing countries, learned from the experiences of newly industrialised countries (NICs) like South Korea, Singapore, Hong Kong and Taiwan which promoted FDI as the catalyst of rapid economic growth in the early stages of their economic development. Empirical studies on the impact of FDI on economic growth have shown positive impact in the host countries. Hence, it has become an area of great interest with empirical determinants of policy implications for enhanced FDI inflows and the mechanism through which it facilitates growth and structural change in recipient countries.

The role of FDI in economic growth in the developing countries is that FDI generate more benefits to the recipient countries rather than just full filling the short-term capital deficiency problems. Transfer of technologies and its spill over effect to the local firms will make the local firms more competitive and high standards which is necessary to compete with the foreign products. Another, spill over effect of MNEs is that MNEs may provide training and labour management which may make them available to the economy in general. The training to local suppliers by MNEs may increase the high standard production and managerial standards.

The relationship between foreign direct investment and economic growth is one of the well studied subjects in the field of development economics. Especially, after the advent of endogenous growth model (Borenzteins, et al, 1995, Balasubramanyam, et al, 1996) made this relationship more vital for long run economic growth. The research interest in this field has increased after 1990s wave of globalisation and massively increased FDI across the globe and economic growth of FDI receiving countries.

According to UNCTAD (2009) foreign direct investment has potential to generate employment, raise productivity, transfer skills and technology, enhance export and continue to the long term economic development of the world’s developing countries. FDI is also the largest source of external financing for developing countries.

Foreign Direct Investment is directly linked to the international trade of the country which provides the opportunities to integrate the local economy with the world economy. Enormous literatures on significance of FDI has shown positive role in the economic growth (Borenztein, 本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。