North-South Globalization and Foreign Direct Investment

Jakob Schwab analyzes central mechanisms in the systematic economic interaction between rich and poor countries. He focuses on the drivers and effects of investment in developing countries and shows that predictions of standard economic analysis may turn around when accounting for peculiarities of North-South globalization. The author shows how endowments with educational skill levels may lead to complementarity between trade and capital inflows, how inflows of direct investment capital may hinder income growth in poor countries, and how the distributional effects of the presence of multinational enterprises are perceived differently in countries of different development structures.