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Submitted by Salamat Ali on

Well said. Developing countries have moved away from the infant industry protection, opened their markets for trade, but have not benefited from the new phenomenon of global value chain and international production networks. To become a part of these global chains and benefit from foreign investment, host countries have to focus on improving domestic conditions and policy environment.
The first important condition to attract FDI is to invest in world class physical and human infrastructure. Second, they need good regulatory environment and dispute settlement mechanism. No doubt investors need some sort of security before incurring a huge sunk cost. Some countries have chosen international guarantees through ICSD.