Parental Supervision: The New Paradigm for Foreign Direct Investment and Development (Policy Analyses in International Economics)

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Parental Supervision amplifies the research Theodore Moran first presented in Foreign Direct Investment and Development (IIE 1998), assessing the opportunities and dangers that foreign direct investment may present to the growth of developing countries. Moran uses almost 50 percent more case studies than the earlier work to examine two types of foreign investments: (1) those that are tightly integrated into the parent firm's strategy and (2) those that are hindered by joint-venture and domestic-content requirements. The study is a comparison between these two types of foreign operations-how backward linkages to local suppliers, operations of local affiliates, and the spillovers and externalities in the host economy differ from one type of foreign operation to the other. In tightly integrated networks, not only is the performance of local affiliates superior and upgraded more continuously, but also, surprisingly, the backward linkages from the affiliates to local suppliers tend to be larger and more robust. Moran reviews contemporary efforts to measure the impact of simultaneous trade and investment liberalization on host country welfare, finding that the magnitude of both the benefits and the costs may be far greater than conventional wisdom suggests.

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Theodore H. Moran is the Marcus Wallenberg Professor at Georgetown University's School of Foreign Service and Director of the Program in International Business Diplomacy. He briefly left Georgetown in 1993-94 when he served as Senior Advisor for economic policy at the U.S. Department of State. Dr. Moran has written widely on international economics and national security, political risk analysis, corporate strategy, and multinational corporations. Since 1971 he has been a consultant to corporations, governments and multilateral agencies on investment strategy, international negotiations, and political risk assessment. He is Counselor to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank Group. He recently authored another book for the Institute, Foreign Direct Investment and Development: The New Policy Agenda for Developing Countries and Economies in Transition (1998).