Echandi, RobertoKrajcovicova, JanaQiang, Christine Zhenwei2015-11-052015-11-052015-10https://hdl.handle.net/10986/22859Evidence shows that foreign direct investment can provide many benefits to host countries, including productivity improvements, better jobs, and knowledge transfer. Further, it can serve as a vehicle for transformation of domestic production and better integration with global value chains. Nonetheless, these benefits are not automatic. Investment policies are required to maximize the potential gains of foreign direct investment. One challenge is that there are different kinds of foreign direct investment, and each may have different economic, social, and environmental impacts. However, the literature analyzing foreign direct investment often tends to swing from an extremely case-specific focus — analyzing experiences in one particular country in a single sector during a given period — to lumping together the analysis as if it was a homogenous phenomenon. Investment policy formulation requires a framework sophisticated enough to differentiate between the various kinds of foreign direct investment, as well as potential challenges and benefits for development. It must also be simple enough to enable governments to organize and prioritize the multiple and complex variables affecting the maximization of investment benefits. This paper presents an overview of the literature on the impact of foreign direct investment. The paper argues that a logical framework is needed to organize existing evidence from research to fill gaps in the literature and make existing evidence more useful in targeting policy making.en-USCC BY 3.0 IGOTAX INCENTIVESWITHDRAWALINVESTMENT PLANSMARKET STRUCTUREFOREIGN CAPITALEQUIPMENTCHECKSTAX RATESFOREIGN INVESTMENTINVESTMENT PROMOTIONSTOCKFOREIGN INVESTORSMULTILATERAL INVESTMENT GUARANTEE AGENCYTAX INCENTIVESINTERESTFOREIGN OWNERSHIPGUARANTEESARMINVESTMENT REGULATIONSINVESTMENT POLICIESEMERGING ECONOMIESPRIVATE CREDITINVESTOR PROTECTIONEXCHANGEDOMESTIC MARKETDEVELOPING COUNTRIESASSETEXPORTERSREVENUESJOINT VENTURESINVESTMENT ENVIRONMENTREINVESTMENTSMARKET SHARESINCENTIVESTAXOWNERSHIPJOINT VENTURESINCOME TAXTREATIESMARKET ACCESSINTERNATIONAL BANKFOREIGN DIRECT INVESTMENTINFORMATION ASYMMETRIESINSTRUMENTSDISPUTE RESOLUTIONPOLITICAL RISKSBUDGETCONVERSIONFOREIGN MARKETSSTATUTORY TAX RATESAMOUNT OF CAPITALLABOR MARKETARBITRATIONLACK OF TRANSPARENCYGLOBAL ECONOMYCURRENCYEXTENSIVEEXPORT GROWTHTELECOMMUNICATIONSCONTRACT ENFORCEMENTHOST ECONOMYINVESTMENT OPERATIONSPORTFOLIOSMULTILATERAL INVESTMENT GUARANTEE AGENCYDOMESTIC CAPITALHOST COUNTRIESCONTRACTSTAX EXEMPTIONSARBITRAL AWARDSFOREIGN FIRMSINVESTMENT INCENTIVESGLOBALIZATIONMARKETSMULTINATIONAL COMPANIESRETURNSETTLEMENTACCUMULATIONENTRY BARRIERSINVESTMENT CLIMATE CONDITIONSDIRECT INVESTMENTTAX REVENUESINVESTMENT OPPORTUNITIESINVESTMENT AGREEMENTSGROSS DOMESTIC PRODUCTTAX REVENUESRETURN ON ASSETSFINANCETAXESACCESS TO INFORMATIONTAX COMPETITIONINVESTMENT DECISIONSTRANSACTIONSINVESTMENT FLOWSINVESTMENT REGIMESEMERGING MARKETSPOTENTIAL INVESTORSEQUITYTRANSACTIONINVESTORSMACROECONOMIC INSTABILITYTAX CREDITGOODINVESTMENT POLICIESTAX RATEINVESTMENT PROMOTIONSTATUTORY TAX RATESTRANSPARENCYINTERNATIONAL INVESTMENTINTERNATIONAL PORTFOLIOSTURNOVERFUTUREVALUEFOREIGN DIRECT INVESTMENTCONTRACTUAL RELATIONSHIPSRETURNSFOREIGN INVESTMENTINVESTOR CONFIDENCECONTRACTINVESTMENT PATTERNSTAX COMPETITIONPROPERTYINVESTMENT TAX CREDITSTAX RATESSHARESAFFILIATED ORGANIZATIONSASSETSMARKETEMERGINGEQUITY INVESTMENTINVESTMENT POLICYTAX RATEINVESTMENT DECISIONSMULTINATIONAL FIRMSINVESTMENT CLIMATE CONDITIONSINSURANCEEXPROPRIATIONFOREIGN FIRMSECONOMIC DEVELOPMENTINTERESTSTAX CREDITSINVESTORGOODSFIXED ASSETSDOMESTIC INVESTMENTGLOBAL TRADESECURITYINVESTMENT OPERATIONSSTOCKSFOREIGN INVESTORSINVESTMENTINVESTMENT CLIMATEHOST COUNTRYSHAREINVESTOR PROTECTIONINVESTMENT FLOWSINVESTMENT CLIMATEPOVERTYINVESTMENT TAX CREDITSTREATYCONTRACT ENFORCEMENTAFFILIATEDPOLITICAL STABILITYREVENUEFOREIGN DIRECT INVESTMENTINVESTMENTSFOREIGN OWNERSHIPINVESTMENT ENVIRONMENTINVESTMENT INCENTIVESINTERNATIONAL INVESTMENT AGREEMENTSINCOME TAX RATEINVESTMENT PLANSTRANSITION ECONOMIESCOMMODITIESHOST ECONOMIESINVESTMENT CLIMATE CONDITIONSPROFITSCAPITAL INVESTMENTLABOR MARKETSINVESTMENT REGULATIONSFOREIGN EQUITYEXPORT SHAREGUARANTEEDOMESTIC INVESTMENTINTERNATIONAL INVESTMENT AGREEMENTSPOLITICAL RISKMULTINATIONAL COMPANIESCOMPETITIONINVESTINGWorking PaperWorld Bank10.1596/1813-9450-7437