Foreign Direct Investments, Corporate Social Responsibility, and Economic Development

Abstract

The increase in FDIs to developing countries has also been accompanied with rising societal expectations from the MNCs and TNCs to demonstrate more commitments to CSR. Owing to the natural resources curse, there is increasing expectations by governments, investors, consumers and local communities that businesses, particularly the MNCs and TNCs, should go beyond local regulatory compliance to earn their ‘license to operate' by demonstrating that their operations provide a beneficial impact by helping to remedy the societal problems. Although it is doubtful whether businesses will take up such responsibilities, some companies have started to engage in sustainable CSR in area of operations. Therefore, the paper recommends that conscious and sustainable CSR practices of these MNCs/TNCs must be accomplished with corporate accountability in order to have the greatest positive impact on people, environment and foster economic development.