Cerezo, Mark Jayson G.

THREE TYPES OF POLITICAL IDEOLOGY OF FOREIGN DIRECT INVESTMENT.

1. RADICAL VIEW (1945-1980)

Radical comes from the Latin word radix (root) and rādīcālis (pertaining to the root). This
uses term referred exclusively to a form of progressive electoral reformism. They argue that it is
an instrument of imperialist domination.

It is a Marxist View and was used by Soviet controlled countries during cold war.

MNEs are coming to just extract the profits from the host country and they won’t return
anything. Keep the developing or under-developed countries as they are.

This include the following approach:

 Extract Profits
 Instrument of domination. Not development
 Give noting value in exchange
 Keep out less develop countries relatively backward and depended on develop countries
for investment, job, technologies.

By the end of 1980 radical view was retreated because:

 The collapse of communism in Eastern Europe
 The abysmal economic performance of those countries that embraced the Radical View
 The strong economic performance of those developing countries that embraced
capitalism rather than the radical view

Among these radical leaders were Joseph Stalin in Russia, Mao Zedong in China, Adolf
Hitler in Germany, as well as more mainstream radicals such as Ronald Reagan in the United
States, and Margaret Thatcher in the United Kingdom.

2. FREE MARKET VIEW

Believes Countries should produce in other countries to balance the production. Free market is a
system are self-regulated by the open market and by consumer
 Nation that specializes in goods and services can produce efficiently
 The resources are transfer evenly especially to the host countries
 Positive changes in laws and growth of countries at least strength of free market view
 Classical economic roots
 Views the multinational enterprise as an instrument for allocating production to most
efficient locations

3. PRAGMATIC NATIONALISM
 Foreign Direct Investment has both benefits and costs. It benefit a host country by
bringing capital, skills, technology, and jobs, but those benefits come at a cost. Therefore,
 pursue policies designed to maximize the national benefits and minimize the national
costs.
 Views FDI as having both benefits and costs