The extract explores the role of inward foreign direct investment (FDI) in fostering domestic economic development and raising standards of living. It highlights empirical evidence showing that developing economies with open-door investment policies experienced real GDP per capita growth rates of over 5.5% annually between 1995 and 2015, compared to just 1.5% in heavily capital-restricted nations. The author also discusses the spillover effects of technology transfers, the creation of highly-skilled manufacturing employment, infrastructural upgrades funded by multinational corporations, as well as potential risks like profit repatriation and domestic crowding out.
Extract C (lines 1-2) refers to the 'vital role of foreign direct investment (FDI) in fostering domestic economic development'.
Explain the concept of economic development and analyse two ways in which inward foreign direct investment (FDI) can foster domestic economic development.
310 exam-style questions on AQA A Level Economics 2.6 The international economy (A-level only), covering 2.6.1 Globalisation, 2.6.2 Trade, 2.6.3 The balance of payments, 2.6.4 Exchange rate systems, and 2.6.5 Economic growth and development. Each one has a worked solution and a mark scheme showing where the marks go.