Development Effects of Foreign Direct Investment in the Realm of the New Development Paradigm: Implications for Development Finance Institutions

This essay is a contribution to the ongoing work of development finance institutions (DFIs) to further develop methodologies that capture a broader range of development effects from DFIsupported investments. Our point of departure is foreign direct investment (FDI) where DFIs invest alongside multinational enterprises (MNEs), but the framework may also be relevant for other types of DFI investments. We argue that DFIs face increasing explicit requirements from their home governments to support sustainable development through their investments, which calls for a conceptual framework to understand the potential links between FDI and sustainable development.