Foreign Direct Investment And The International Political Economy Analysis Of The Developing Countries' Interests

In this article, we adopt the perspective of International Political Economics to analyze the political and economic effects of foreign direct investment (FDI) on the national interest of developing countries.First, we review the study of national interest and specify the definition we use in this article, which includes both economic and political interest. Second, we examine FDI worldwide, chief theories of FDI and empirical research concerning how FDI affects the interest of developing countries.In the main body of this article we will establish a game model with three players: the developed country, the multi-national company and the developing country. Two of the three players are included in the game model each time, with the developing country as the constant. We examine the strategies of each player and define their income functions, with economic and political interest included.In the following three chapters, we analyze the game between the developed country and the developing country, between the multi-national company and the developing country and between two developing countries separately. When analyzing the game between the developed country and the developing country, we examine how the international institutions and the foreign policy of the former affect the latter’s national interest when attracting FDI. When analyzing the game between the multi-national company and the developing country, we examine how the former’s bargaining power, investment qualities, investment types and political behaviors affect the latter’s national interest. When analyzing the game between two developing countries, we examine how their cooperative and competitive behaviors concerning FDI affect each country’s national interest.In the last section we will empirically examine whether FDI leads to the economic development of developing countries.