Assess the impact of foreign direct investment (FDI) on developing economies.

Mark scheme

Marking points from the official mark scheme (May/June 2019). The mark or mark type is shown in brackets.

1. Answers should clearly identify what is meant by foreign direct investment (FDI) and should demonstrate an awareness of its special importance regarding developing economies. Links between FDI and multinational corporations should also be referred to. The focus should be upon the impact of FDIs on developing economies. This focus would examine both positive and negative impacts on key areas of a developing economy such as: growth; employment; infrastructure; balance of payments; environment.
2. A clear explanation of the connections between low incomes, low savings, low investment and low growth rates should be provided. Responses might also refer to the cycle of poverty relating to development which refers to links between low income, low levels of education, low productivity. The effectiveness of alternative measures introduced to break these cycles should be discussed.