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Attracting foreign direct investment in Latin AmericaAttracting foreign direct investment in Latin America

As a global studies professor with expertise in Latin America, Thunderbird’s Roy C. Nelson, Ph.D., hears many concerns about the effects of globalization.

“At the academic conferences I attended, I was constantly hearing about how terrible globalization was for developing countries,” Nelson said. “I heard that these nations were victims of globalization.”

Nelson took this academic concern to heart, began a journey to tackle the issue and developed what is now his latest book, “Harnessing Globalization: The Promotion of Nontraditional Foreign Direct Investment in Latin America.”

Scheduled to be released this summer through Pennsylvania State University Press, the book draws upon Nelson’s field research in Brazil, Chile, Costa Rica, Mexico, Ireland, and Singapore to reveal ways that countries can attract nontraditional forms of foreign direct investment in order to promote their own development.

“Based on my experiences, I wanted to understand why some governments seem to be more effective than others at attracting what I call nontraditional foreign direct investment,” Nelson said.

He argues that nontraditional foreign direct investment, which requires more advanced skills and training from a country’s workers, can help improve a country’s development prospects and diversify its economy. Examples of this include investment in software development centers, biotechnology or global services.

Since 2000 Nelson has worked with the Chilean Economic Development Agency (CORFO) in establishing consulting workshops at Thunderbird and providing internships for Thunderbird students in Chile. He also wrote numerous journal articles and case studies, including one on Intel’s site selection plan in Costa Rica, which he uses in his Latin American regional business environment class.

Nelson said his former student, Ted Telford, got a job as a site selection analyst for Intel, which provided a connection for that case study. “He played an important role on the site selection team,” Nelson said. “And because of my connections through Ted, I was able to get in touch with many of the key players at Intel and in the Costa Rican government.”

Nelson also dug beyond his immediate academic circle, conducting interviews with a number of government officials and business executives. His interviews focus on Latin American countries, but Nelson also did research in Ireland and Singapore, two investment success stories, to provide comparative perspective.

“A key concept I develop in my book is how governments can develop their ‘transnational learning capacity’ to learn more about prospective investors, which can make them more effective when dealing with these investors and attracting nontraditional FDI,” Nelson said.

This idea, along with the importance of government’s autonomy from special interest groups, provides Nelson with the evidence to report that underdeveloped countries can reap the rewards of globalization.

 “It allows them to share in the benefits of higher value-added, high-growth sectors and to develop human resources to a greater degree than by just exporting coffee, copper or bananas,” Nelson said. “I also believe that it can provide linkage effects to their economies so that local firms can benefit from this FDI.”