11.5.2—Trade and investment

Trade gives access to markets, inputs and technology; foreign direct investment brings capital and managerial or technical knowledge under foreign ownership. Both can support growth and development when domestic linkages and institutions are strong.

Risks include dependence on volatile commodities, profit repatriation, weak labour standards, environmental damage and crowding out local firms. Evaluate who receives income and whether capability remains after the flow changes.

A foreign manufacturer can train local suppliers and workers, while an enclave mine that imports inputs and exports profits may create much less broad development.

More trade or FDI is not automatically beneficial, and a trade surplus alone does not prove structural transformation.