Natural Resource-Seeking FDI Inflows and Current Account Deficits in Commodity-Producing Developing Economies

The “Finance‐Extraction‐Transitions Nexus”: Geographies of the Green Transition in the 21st Century

“…For example, Goda and Lysandrou (2019) contend that due to profit repatriation following capital inflows into the natural resource sector, current account balances of natural resource‐rich Latin American counties have been negatively affected in the 2000s commodity boom. Similarly, in their study estimating the impacts of natural resource foreign direct investments (FDI) on current account balances of 31 Global South commodity‐producing countries between 1995 and 2013, Rios Balleteros and Goda (2017:1) find that “the average net effect of a 1% increase in natural resource‐seeking FDI was a 0.23% decline in the current account (measured as a percentage of GDP)”. This has made resource‐abundant Global South countries increasingly dependent on balancing their sheets through loans from international financial corporations, which further perpetuate dependencies and financial subordination (see Franz 2021; McNelly 2023).…”