Private Foreign Investment in Developing Countries: A Quantitative Study on the Evaluation of the Macro-Economic Effects (International Studies in Economics and Econometrics, 7)

This study is the result of research undertaken by the Netherlands Economic Institute, Division Balanced International Growth, Rotterdam, under the auspices of the O.E.C.D. Development Centre. In the division of labour agreed with professor Grant L. Reuber, who directed a parallel study under the auspices of the Centre' , the N.E.I. research deals with the evaluation of economic effects of private foreign investment in developing countries. The effects studied are confined to macro-economic effects which are quantifi­ able. The lack of a satisfactory methodology for the assessment of these effects seemed to justify this limitation in the approach to the evaluation of private foreign investment. The study is organized as follows. Part I reviews briefly and critically the literature about the evaluation of private foreign investment and suggests the need for an appropriate macro-economic methodology. Part II develops the principles and techniques for such a methodology which is applied empirical­ ly to data for five developing countries in Part III. While Parts II and III are concerned with the effects of aggregated volumes of private foreign invest­ of the previous parts, the appraisal of ment, Part IV considers, independently projects financed through foreign investment and discusses the special fea­ tures of social benefit-cost analysis of such projects. Front Matter....Pages I-VIII Front Matter....Pages 1-4 General Introduction....Pages 5-9 Problems in and Criteria for Evaluating the Impact of PFI....Pages 10-16 The Contribution to GNP....Pages 17-30 The Balance of Payments Effect of PFI....Pages 31-35 Issues Concerning other Effects of PFI....Pages 36-41 The Unctad Study on PFI....Pages 42-46 Front Matter....Pages 47-56 General Introduction....Pages 57-60 A Model of LDC’S Economy with Special Reference to PFI....Pages 61-78 The Economic Effects of PFI....Pages 79-89 Other Economic Effects of PFI Not Considered by the Model....Pages 90-96 The Interdependence-Simultaneous and Over Time-of the Effects of PFI....Pages 97-100 The ‘Cumulative’ Effects of PFI....Pages 101-107 The ‘Marginal’ Effects of PFI....Pages 108-117 Cumulative and Marginal Effects Compared....Pages 118-137 Sectoral Disaggregation and Input-Output Analysis....Pages 138-143 Various Practical Situations and the Use of the Model....Pages 144-145 The Use of the Model for Decision-Making....Pages 146-147 The Use of the Model for Empirical Investigations....Pages 148-149 Evaluation and Conclusions....Pages 150-151 Back Matter....Pages 152-152 Front Matter....Pages 153-160 General Introduction....Pages 161-162 Front Matter....Pages 153-160 The Choice of Countries....Pages 163-164 The Main Modifications Introduced....Pages 165-167 Estimation of the Parameters and Solving Procedure....Pages 168-169 India....Pages 170-203 The Philippines....Pages 204-229 Ghana....Pages 230-269 Guatemala....Pages 270-299 Argentina....Pages 300-323 A General Comparison of the Empirical Outcomes....Pages 324-330 Alternative Assumptions about Import Substitution....Pages 331-336 General Conclusions on the Empirical Applications of the Methodology....Pages 337-338 Front Matter....Pages 339-342 Introduction....Pages 343-344 Principles of Social Cost-Benefit Analysis....Pages 345-363 Basic Characteristics of Private Foreign Investment Projects as Distinct From Domestic Investment Projects....Pages 364-370 The Impact of the Special Characteristics of Private Foreign Investment on the Methodology of Social Cost-Benefit Analysis....Pages 371-375 Outline of a Social Benefit-Cost Scheme for Appraising Private Foreign Investment Proposals....Pages 376-391 Some Refinements and Complications....Pages 392-395 Social Cost-Benefit Analysis as a Tool in Negotiating with Foreign Firms....Pages 396-398 Back Matter....Pages 399-402 This study is the result of research undertaken by the Netherlands Economic Institute, Division Balanced International Growth, Rotterdam, under the auspices of the O.E.C.D. Development Centre. In the division of labour agreed with professor Grant L. Reuber, who directed a parallel study under the auspices of the Centre', the N.E.I. research deals with the evaluation of economic effects of private foreign investment in developing countries. The effects studied are confined to macro-economic effects which are quantifiƯ able. The lack of a satisfactory methodology for the assessment of these effects seemed to justify this limitation in the approach to the evaluation of private foreign investment. The study is organized as follows. Part I reviews briefly and critically the literature about the evaluation of private foreign investment and suggests the need for an appropriate macro-economic methodology. Part II develops the principles and techniques for such a methodology which is applied empiricalƯ ly to data for five developing countries in Part III. While Parts II and III are concerned with the effects of aggregated volumes of private foreign investƯ of the previous parts, the appraisal of ment, Part IV considers, independently projects financed through foreign investment and discusses the special feaƯ tures of social benefit-cost analysis of such projects