The purchase of real assets abroad; through acquiring land, buying existing foreign businesses, or constructing buildings, or mines. Inward foreign direct investment is the acquisition of real assets within a country by non-residents.

T. Moran et al. (2005) argue that FDI almost inevitably delivers economic development benefits. ‘For host economies, especially developing ones, FDI from other developing countries can add to inflows of other external financial resources, including FDI from developed countries, commercial bank lending, portfolio investment and ODA. For poorer developing countries, it can be significant, accounting for over half of total FDI inflows into several LDCs’ (UNCTAD 2006).

However, J. Dunning (1997) characterizes FDI as a bearer of scarce capital and technology that lacks both local linkages and technology transfer. ‘Increasing locational “tournaments” to attract FDI…may have reduced the benefits to the host countries, as have the increasing skill of the managers of MNEs in making their investments more “footloose” ’ (Buckley and Ghauri (2004) J. Int. Bus. Studs 35). Phelps (2008) Reg. Studs 42, 4 argues that FDI is currently skewed towards the interests of TNCs, rather than the interests of local and national communities and governments. Naudé and Krugell (2007) Applied Econs 39, 1223 find that neither market-seeking nor re-exporting motives dominate FDI, but good policies made by good institutions in the form of political stability, probably do.