Do capital inflows cause industrialisation or de-industrialisation?
There is a clear appeal for emerging and developing economies, including those in MENA, to finance investment in manufacturing industry at home with capital inflows from overseas. But as the evidence reported in this column indicates, this is a potentially risky strategy: rather than promoting industrialisation, capital flows can actually lead to lower manufacturing value added and/or a reallocation of resources towards industries with lower technology intensity.
The environmental impact of foreign direct investment in MENA
Are countries in the Middle East and North Africa ‘pollution havens’ when it comes to foreign direct investment (FDI) – or do they merit a ‘pollution halo’? This column reports evidence on how the quality of economies’ institutions and human capital influences the environmental impact of FDI.