Why did the governments of developing and emerging countries reach a more favorable assessment of the role of multinationals? The major evolution is the deepening economic integration brought by globalization. Globalization accentuates the importance of the international economy for developing countries. And in this context, foreign direct investment (FDI) has become one of the most dynamic flows of resources to developing countries.

This survey critically reviews the empirical literature on the impact of foreign direct investment in developing countries with a view to derive policy lessons. This exercise proves quite enlightening as it enables to simultaneously consider the objectives of the multinational companies and those of host countries. Finally, this survey focuses on FDI in manufacturing and the issue of technological upgrading. This contrasts with some previous surveys, which reflected the larger role of FDI in resource based sectors played from the 1960s to the 1980s.