Can developing countries grasp the horn of Amalthea? The impacts of FDI on the development of host countries

By analyzing 150 articles published between 2010 and 2023, this systematic literature review explores the diverse effects of foreign direct investment (FDI) on developing countries across economic, social, environmental, and sustainability dimensions. The research underscores that the ability of FDI to stimulate growth largely depends on the host country’s absorptive capacity, including factors such as human capital, financial institutions, and infrastructure. It highlights the complexities involved in evaluating FDI’s economic impacts, given the varied findings across studies, and emphasizes the growing significance of environmental and social considerations aligned with sustainable development goals. The key contributions of this study include a comprehensive synthesis of the current literature on FDI impacts, critical analysis of host countries’ absorptive capacities, exploration of discrepancies in economic impact assessments, a focus on environmental and social dimensions within FDI research, and policy recommendations aimed at harnessing FDI for sustainable and inclusive development in developing countries. These insights are crucial for comprehending the multifaceted role of FDI and devising strategies for its optimal utilization in emerging economies.