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6GEO3 Unit 3 Contested Planet Topic 5: Bridging the Development Gap - page 21 / 24

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Investment

Flows of money to the developing world may be in the form of aid, but investment is important

When companies and TNCs invest in the developing world this flow is called Foreign Direct Investment (FDI)

FDI is motivated by profit

FDI is used to set up factories fund construction in the developing world

Most FDI flows towards NICs and RICs because they have a skilled workforce, and large markets

There are question marks over the environmental and social value of FDI is relation to pollution and worker rights

The top 10 developing world locations for FDI in 2007 (in $ millions).

Notice the lack of least developed countries in the list

China & Hong Kong

1,511,000

Brazil

328,000

Mexico

266,000

Turkey

146,000

Chile

106,000

South Africa

93,000

Thailand

86,000

Malaysia

77,000

India

76,000

Saudi Arabia

76,0000

Governments use Export Processing Zones (EPZs)and Free Trade Zones (FTZs) to help attract FDI. China has over 50 of these. In these zones foreign investors receive special tax breaks, rents are low and unions are often banned.

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