Assessing the Need for Controls Over Inward Direct Investment in Developing Countries

Singh’s arguments against the creation of a laissez-faire system governing international flows of foreign direct investment are broadened to recognize the implications for a laissez-faire system of the lesser degree of economic sophistication of host governments in developing countries. Given a close interface between foreign ways of doing business and the benefits of inward FDI, the paper addresses two areas in which government regulation may not be adequate to the tasks imposed: issues of worker and consumer safety; and issues of deliberate exploitation of the host country by executives of the parent company or of the local affiliate.