Changing role of the public sector in the promotion of foreign direct investment

Foreign direct investment (FDI) is one of the key drivers of globalization. The challenge for developing countries is to tap FDI in a way that promotes their long-term development objectives. Governments of developing countries need to go beyond offering a “passive open door” regime for FDI to one that positively enhances required human resource skills for the absorption of FDI. In that regard, Governments, through the public sector, need to create a conducive policy environment that enables FDI to contribute towards enhancing the international competitiveness of the host country on the basis of a dynamic development of comparative advantage.