This is an interesting paper about an important topic, namely, the effects of globalization on developing countries. It first highlights some “neglected” details about TNCs and FDI. The rest of the paper is then spent discussing how developing country governments should respond to these new challenges, concluding that they should continue to try and use industrial policies to restrain the forces of globalization, largely by controlling the amount of technological transfer that such investment provides. The exposition is certainly clear but, at the end of the day, I must confess that I remain largely unconvinced by the arguments.

“The facts, ma'am, the facts.” The author focuses on several “neglected” details about foreign direct investment. First, most FDI occurs across industrial countries, and is thus not much of a benefit to developing countries. Second, a few favored countries have been receiving the bulk of recent FDI flows. Finally, FDI was not very important in investment and development even in these countries. The overall argument is that FDI's role in development has been overstated.

It is certainly true that most FDI occurs across developed countries, but the issue is considerably more complex than this. The text never mentions the words “greenfield” or “acquisitions,” the two categories into which FDI is generally divided because of their different implications for “real” behavior. Greenfield investment occurs when a company comes in and builds a new plant in a country – in other words, its financial investment in a country is supported by physical investment, as measured in the national accounts.