Globalization, Natural Resources and Foreign Investment: A View from the Resource-Rich Tropics

This article uses data drawn from Southeast Asia and West Africa to help explain the geographical distribution of foreign investment. Why during late nineteenth- and early twentieth-century globalization did the attributes of abundant natural resources, mass migration and export expansion that attracted large foreign investment to the New World not similarly draw capital to the tropics? I argue that in a number of tropical countries, rich natural resources and cheap labour available through mass migration effectively substituted for foreign borrowing. At the same time, the dominant institution of colonialism throughout Southeast Asia and West Africa limited borrowing from abroad and helped to ensure that even for these resource-rich countries capital flows remained slight.