Foreign direct investment strategies: Least developed countries and foreign firms. A case study of Sudan and Chevron Oil

The least developed countries (LDCS) are politically underdeveloped. They often have autocratic authoritarian regimes that give less than appropriate attention to their societies' development. Being vulnerable and fairly unstable, such regimes are more occupied with their own survival than with developing pragmatic plans that cater to supplying their nations with missing economic resources needed through Foreign Direct Investment (FDI).; LDCS are under various local influences, part of which are of colonial heritage nature and part are of their own making. There are inter-regional problems stemming from unbalanced growth and ethnic and religious problems. There are also some external influences facing LDCS which push them different ways and finally lock them in a dependency relationship with the outside world.; These internal and external pressures on LDCS with such primitive political structures have greatly confused their leaderships and have resulted in the lack of institutionalization in these countries. Foreign firms normally choose to serve world markets through direct operations rather than exporting or licensing because the former maximize their gains more than the two other alternatives. In addition foreign firms with various affiliates and subsidiaries around the globe coordinate their activities for even further gains through the cut in transaction costs and avoidance of market imperfections.; This is why benefits to host countries may not match a host country's expectations when it allows FDI penetration. Limited benefits in the form of new employment and tax revenues may be enjoyed by host countries.; Host countries should apply well researched policies that are a reflection of world and regional conditions. A country must do more than merely design attractive FDI policies in order to maximize its scarce resource returns from an international arrangement.; It is the contention of this research that Sudan failed to formulate a "right" policy towards FDI. This is why it came short of maximizing its scarce resources returns employed by foreign firms. On the other hand, Chevron Oil, being a typical transnational corporation with a global overall profit maximization strategy, succeeded in running its subsidiary in Sudan in accordance with its global outlook. (Abstract shortened with permission of author.)...