to be the creation of 83.5 new export lines for the host countries. Iwamoto and Nabeshima

(2012) have tested the impact on 175 countries. They found out that, FDI inflows have positive

impact on export diversification of the developing countries, but no significant effect on

developed countries. The reason according to the studies is that the Multinational Corporations

(MNCs) are more diversified and developing countries are affected by the spill-over effects of

the FDI brought by theMNCs. Another study by Hailu (2010), examined the impact of FDI inflows

on Sub Saharan Africa countries. The study found out that a 1 percent increase in FDI in the

previous year brings about 0.043 percent increase in exports of the following period.

Another obstacle faced by most of the Member States is the concentration of the export oriented

FDIs on traditional sectors. Harding and Javorcik (2011) underlined that, if the FDI exports are

only products that the host country already exports

intensively, the efficiency-seeking FDI could move

towards more specialized rather than more

diversified exports. Thus, FDI does not contribute too

much to export diversification. For example

according to UNCTAD (2011), which investigated the

sectorial distribution of the FDIs in LDCs, m

any large projects are in the form of greenfield and

expansion

projects

prospecting for reserves of base metals and oil. The study also cited the lack

of political stability and unavailability of skilled workers as main reasons for low performance

of investment in the manufacturing sector in Africa.

FDI inflows is also considered as the largest source of external finance for developing and least

developed countries where insufficient finance constitutes a bottleneck for development.

According to UNCTAD

39 per cent of incoming finance in developing countries and less than

25 per cent of incoming finance in LDCs is fromFDI. Global foreign direct investment (FDI) flows

which hovered around 1.3 to 1.4 in the aftermath of global crisis, increased to around 1.9 trillion

dollars in 2015-2016 period. However global FDI fell by 23.4 percent to 1.4 trillion dollars in

2017. Figure 57 illustrates the global FDI inflows and shares of developing and developed

countries versus OIC countries. The figure reveals that the developed countries is the largest

recipient of FDI with a share of 50 per cent in global FDI inflows while the share of developing

countries is 46.9 per cent in 2017. However the share of OIC countries in global FDI inflows