Background

Twenty years ago, Lall and Narula (2004) proposed that it was time to reconsider the role of foreign direct investment (FDI) in economic development amidst a liberalizing global economy. Today, we believe a similar reflection is necessary given the substantial changes that the global economic system is recently undergoing that impact FDI, including the strengthening sustainability imperative, the digital revolution, and the rising geopolitical tensions. This special issue aims to inspire new thinking on foreign investment for development, focusing on how this relationship has evolved and what role policy plays in it.

The discussion comes at an opportune time as numerous countries and international organizations have turned their attention to foreign investment for development. While the topic has been a longstanding focus of the United Nations Trade and Development (UNCTAD), i.e., as a central theme of its flagship publication, the World Investment Report, it has also become a focal point at the World Trade Organization (WTO). The WTO has entered negotiations on Investment Facilitation for Development, aiming to develop a global agreement to improve the investment and business climate in developing countries. Moreover, numerous international governmental organizations (IGOs) and the Academy of International Business (AIB) have recently joined forces to develop the World Investment for Development Alliance (WIDA) to create a collaboration mechanism for sustainable international investment. This special issue aims to contribute to this conversation. It aims to provide both theoretical and empirical insights that can support international organizations and governments in developing a robust FDI policy agenda on investments for development.

Foreign Direct Investment for Development

One of the most hotly contested issues in international business research concerns the varied roles of multinational enterprises in the development process of countries (Lall & Narula, 2004; Ghauri, Fu, and Vaatanen, 2017). For many years, FDI has been painted as an integral part of an open and effective international economic system and a major catalyst for development (De Mello, 1997; Borensztein et al., 1998). Scholarship has focused on the benefits of inward FDI (IFDI), especially in developing countries (Fu, Buckley and Fu, 2020; Sawitri & Brennan, 2023; van der Straaten et al., 2023). It found that IFDI can stimulate economic development (Moran et al. 2007) and facilitate country catch-up (Larmin & Livanis, 2013). It does so by boosting the productivity of local companies in upstream and downstream sectors (Alfaro & Chauvin, 2022), fostering technology and knowledge transfer (Meyer & Sinani, 2009), and improving managerial and employee skills (Alfaro & Chauvin, 2022; Fu, Essegbey, & Promkon, 2019). It can also influence institutional and regulatory environments, especially in developing countries, by strengthening their intellectual property (IP) protection standards (Brandl et al., 2018). Beyond these economic benefits, IFDI can improve environmental and social conditions in host countries by transferring “cleaner” technologies and encouraging more socially responsible corporate actions (Fu et al., 2021; Amendolagine et al., 2021; 2023; Wiessner et al., 2024). For all these reasons, IFDI is considered a critical tool for achieving the United Nations Sustainable Development Goals (UN SDG) at both the host-country and global levels (Montiel et al., 2021; van Tulder et al., 2021).

Moreover, outward FDI (OFDI) has also been linked to development (Castellani et al. 2008; Dunning & Lundan 2008; Bathelt & Buchholz 2019), especially its potential to generate growth in the home region by facilitating skill upgrading and generating jobs that support foreign-based activities, creating new markets and stimulating production growth, as well as facilitating access to both foreign business networks and new knowledge. This finding not only applies to advanced economies but also to developing countries (Hennart, 2012; Pananond, 2015; Fu, Buckley & Fu, 2020). For example, emerging-market multinational enterprises (EMNEs) can learn from their internationalization activity and gain experience by accessing geographic and culturally distant markets (Luo & Tung, 2007; Amendolagine et al., 2018).

However, the benefits of FDI are not automatically or evenly distributed across countries, regions, sectors, and workers (Fu, 2004; Alfaro & Chen, 2016), with many stakeholders facing negative implications that can hamper development. For instance, researchers have found that FDI can distort local labor markets (Gagliardi et al., 2021) and temporarily reduce employment opportunities (Moore et al., 2023). It was found to hamper indigenous entrepreneurship and innovation (Zahra & Hashai, 2022; Fu, Pietrobelli, & Soete, 2011), enhance rural poverty (Brandl et al., 2021), exploit local deficiencies such as constrained free speech (Fiaschi et al., 2017), transfer irresponsible business practices abroad (Surroca et al., 2013), and create chokepoints that can generate national security concerns (Luo & Van Assche, 2024). These negative implications of FDI have spurred debates in both academic and policy circles on the overall impacts of FDI for development and how to identify and spur Sustainable FDI (Sauvant, 2021), quality FDI (OECD, 2019) and socially responsible investment (SRI) (Sparkes & Cowton, 2004) that aim to enhance development. 

In this context, developing the right FDI policies at both the national and international levels is crucial for maximizing the developmental benefits of FDI (Buckley, 2018). Nations and international organizations need to develop these in a global economy that is trying to reinvent itself. The launch of the UN SDGs is a manifestation of the growing sustainability imperative that policymakers are adopting in their development of FDI policies. Growing geopolitical tensions imply that governments are also including security concerns in their FDI policies. Development in digital technologies and artificial intelligence, as well as the climate change challenge, suggest that countries need to reflect on the implications that these have on FDI.

This JIBP special issue seeks manuscripts on the broad subject of “foreign investment for development.” We are particularly interested in articles that study how this relationship has evolved, considering new global realities related to grand challenges, such as climate change, the 4th industrial revolution, and rising geopolitical tensions. We welcome submissions that are grounded in the fields of international business, development economics, economic geography, international economics, and development studies.

Possible Topical Areas of Interest

For this special issue, we invite scholars to contribute theoretical and empirical research that expands or improves current knowledge on the interaction between foreign investment and economic development. Submissions may include but are not restricted to the following topics:

Relation between FDI and economic/sustainable development

1.      Types of FDI and their impact on economic development:

Is inward and/or outward FDI a boon or bane for economic/sustainable development?

What is sustainable/quality FDI, and how does it relate to economic/sustainable development?

Which type of FDI is best for inclusive and sustainable development?

What is the relation between impact investment and economic development?

What role does the location of origin of the MNE (e.g., multinationals from emerging markets) and size and maturity of the firm (e.g., small multinationals or born globals) play in economic development?

Do MNEs’ CSR investments have economic development outcomes?

2.      Impact of FDI on different levels and paths of economic/sustainable development:

How effective is FDI for transferring knowledge and technology?

What explains the uneven distribution of FDI around the globe?

Does South-South FDI impact development differently from North-South/North-North FDI?

What role does FDI play in global and regional value/supply chains?

What role does FDI play in achieving the UN Sustainable Development Goals?

Does FDI enhance or constrain the green transition in developing countries?

What are ethical issues related to FDI and economic development?

What are FDI’s potential drawbacks, such as lack of positive linkages with local communities and potentially harmful social and environmental impact of FDI, especially in the extractive and heavy industries?

3.      External factors impacting FDI and economic development:

How does geopolitics influence the relation between FDI and economic/sustainable development?

Have the digital revolution and AI affected the relationship between FDI and economic/sustainable development?

What role does timing play in the relationship between FDI and economic/sustainable development?

Relation between policies and FDI/international business

4.      Policy impacts FDI/international business:

Do FDI policies generate the envisioned effects of economic development? What are their unintended consequences?

How do policies for economic, sustainability, or national security reasons affect multinational enterprises and their global value chains?

How effective are FDI policies that aim to reduce inequality?

What is the rationale for supranational investment facilitation policies, such as the WTO’s “Investment Facilitation for Development”?

What are the predicted gains from a WTO agreement on Investment Facilitation?

What role can supranational soft policies play in investment facilitation?

How does the European Union Cohesion Policy affect economic, social and territorial inequality?

5.      FDI/international business impacts policy:

How do public agendas around FDI policy emerge and evolve in light of recent patterns of FDI? How do MNEs and other stakeholders influence/lobby for FDI policies?

How do governments align/misalign with FDI policies?

While the title states “Investment,” the special issue would also consider papers that look at the operation of multinational firms in host countries regarding their development impact, even after the original investment has taken place.  The examination of how MNE activities in host countries affect economic development – or other aspects of development such as social or institutional development or pursuit of the UN’s Sustainable Development Goals – would be welcome, again if the analysis includes explicit consideration of actual or potential government policy.

Focusing on this topic can help our scholarly community build stronger bridges with policy actors in national governments and international organizations, which is one of the ultimate goals of the journal. JIBP is also interested in papers that emphasize the company perspective on government policies and on the role of international organizations. So, overall, the goal is to focus on investment strategies and government policies that contribute to development.

Envisioned impact

The discussion on foreign investment for development in this special issue should provide useful and holistic insights for policymakers in the areas of trade and investment promotion, as well as those involved in foreign relations, on the consequences of FDI in developing countries. At the same time, such discussion should also benefit managers who conduct FDI, both in advanced and developing economies.

Submission and Review Process

Submitted manuscripts must adhere to the scope, standards, format, and editorial policy of the Journal of International Business Policy (JIBP). “Author Guidelines” and the JIBP Style Guide for Authors must be followed.

The Special Issue will proceed in two phases. In Phase 1, the four guest editors will review all submitted proposals. An extended abstract should be around 2000-3000 words, including graphs, tables, figures, and references. It should provide (i) the author(s)’ details, (ii) the purpose of the study, (iii) the research question(s) being addressed, (iv) how the article addresses the core concepts of the special issue; and (v) the relevance of the study for scholars and policy professionals; and (vi) the envisioned impact of the paper.

Extended abstracts should be emailed to the JIBP Managing Editor, Anne Hoekman, at managing-editor@jibp.net with “Special Issue Foreign Investment” in the subject line.

Contributors with submissions likely to contribute to the SI will be invited to develop a full paper. These invitations provide no guarantee for publication in the SI. They serve as indications of interest in how the full papers can contribute to the SI. In Phase 2, the submitted papers will go through the regular JIBP process of submission, peer-review, revision, acceptance, and JIBP publication. The timeline for submission is as follows:

January 30, 2025       Deadline for extended abstract submission by email to managing-editor@jibp.net

August 30, 2025        Deadline for submission of full papers via JIBP’s Manuscript Central portal

September 2026        Expected publication of SI (accepted articles published online)