Reflections on Foreign Direct Investment and Development with Reference to Non-Governmental Organizations and Corporate Social Responsibility

Abstract

It is clear that the process of ‘globalization’ has presented acute economic challenges to developing countries. Great importance has been accorded to foreign direct investment (FDI) as a driver of development, a consequence of which is the further empowerment of transnational corporations (TNCs). Competition for FDI prevents host governments from implementing tough regulatory measures. In their stead have stepped in non-governmental organizations whose lobbying has had an appreciable impact on TNC activities and strongly contributed to the rise of corporate social responsibility (CSR). The article posits the concept of an ‘efficiency CSR hypothesis’. Though CSR is a positive outcome, it does not detract from the profound problems of development for the weakest developing countries via the route of inducing FDI in a globalized economic environment. Contrary to expectations, the increasing interdependence in the world economy presents formidable challenges to development and poverty alleviation for such economies.