Comparison of the Effects of Political Decisions in the United Nations General Assembly and Economic Decisions on the Attraction of Foreign Direct Investment in Developing Countries

Document Type : Research Paper

Authors

1 Ph.D. Candidate in Economics, Semnan University, Semnan, Iran

2 Associate Professor in Economics Dept. of Economics, Faculty of Economics Management and Administrative Sciences, Semnan University, Semnan, Iran

3 Professor, Department of Economics, University of Isfahan, Isfahan, Iran

Abstract

This statement that "capital is the most important driving force for growth and subsequent economic development in countries" can be considered universally accepted by all economists (regardless of economic school of thought). As a result, all models of growth and economic development have been developed based on the accumulation of capital. Therefore, this question arises: How is it possible to strengthen the production structure and apply advanced technologies in countries that are facing a lack of capital? In this regard, researchers have shown great interest in foreign direct investment as a cover for the lack of capital in countries. Foreign direct investment is a type of investment that includes long-term relationships in which an economic unit in one country controls and benefits from a business unit in another country. Various studies indicate that successful countries in attracting FDI can provide the necessary conditions for positive future for multinational companies (as the most important players in the field of foreign direct investment). Furthermore, one of the main motivations for developing countries to attract foreign direct investment is mentioned as transferring and acquiring the necessary technologies to improve the productivity of domestic enterprises.
 
However, what leads to the attraction of this type of investment in developing countries (as the main applicants for capital and technological inputs) has always been a challenging issue. Some thinkers mainly focus on economic variables (such as economic openness, infrastructure availability, developed financial markets, etc.), while others do not find them sufficient and rely on non-economic factors, mainly derived from political science and international relations. According to them, the economic actions of individuals and companies are influenced by international political alignments, and therefore achieving economic development is only possible within this framework. This issue has become important in recent years with the popularization of the use of sanctions (meaning the use of economic tools to change the political behavior of a country) among the great economic powers.

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Main Subjects

References

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Quarterly Journal of Applied Theories of Economics
Volume 11, Issue 2 - Serial Number 41
September 2024
Pages 35-62

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