Foreign Direct Investment and Domestic Savings-Investment Behaviour-Developing Countries Experience

Savings-Investment Behaviour Developing Countries' Experience Biswajit Dhar Saikat Sinha Roy Two main arguments have been advanced in support of the role of foreign direct investment (FDl) in stimulating growth processes in developing countries. The first, essentially a short-term view, maintains that FDI can help mitigate problems encountered in external debt management. The second takes a longer-term perspective while arguing that FDl has the potential of meeting the domestic resource gaps of developing countries thereby enhancing their growth prospects. This paper examines these two views by looking at the experience of 16 developing countries which have attracted the largest flows of FDl and have the largest stocks of FDl in the developing world.