A model to evaluate FDI prospects: illustrated by its application to three Asian countries

All foreign direct investment (FDI) projects should prudently be evaluated in terms of a full set of criteria, i.e. holistically, rather than purely on the narrow financial basis which is too often the case. This paper considers a schema or screening device (an 'FDI-screen') designed to deliver such a holistic approach when operated in conjunction with normal financial appraisal tools. Although initially designed for use by firms to evaluate individual projects or project clusters (i.e. looking outwards), it can also be readily adapted for other uses such as host countries assessing their potential attractiveness to would-be investors, or by external agents seeking to gain an overall perspective of a host's desirability for FDI (i.e. an inbound view). The schema is used in this second way, applied to data from three developing countries, China (the PRC), Pakistan and Burma. The paper thereby both illustrates the summarising and presentational power of models such as the FDI-screen, a fairly simple multi-criteria decision making model, and also highlights just how varied the picture may be for differing developing (or even LDC) economies.