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Foreign investment and competitive development in Latin America and the Caribbean

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Author: Vera Vassallo, Alejandro UN symbol.: LC/G.1943-P p. 133-154 December 1996


This article analyses the treatment accorded to foreign investment under the present development strategy. To this end, it looks at the recent dynamics of both direct and indirect foreign investment, including portfolio investment and quasi-equity operations, the latter with reference to contracts for the transfer of production know-how. For this purpose, the main resource flows and their directions are analysed, together with the changes which have taken place in corporate strategies. It is concluded that it is necessary to put together an explicit development strategy in which the main objective of policy on the treatment of foreign investments should be that of enriching the store of technological knowledge of the host economies. This policy should be complemented with others concerning the capacity for the absorption of technology, so as to strengthen industrial and technological learning capacity, as the foundation of a phase of endogenous innovation and dynamic expansion of international competitiveness.