It is nowadays accepted that FDI plays a crucial role in industrial development of the developed and developing countries alike and can help in boosting economic growth through, for example, total factor productivity growth. FDI increasing comprises sets of inter-connected operationalized business decisions by multinational enterprises (MNEs) in response to changing global and regional competitive, strategic considerations and factor conditions. As such, FDI Policy Instruments, which have analytical and regulatory dimensions, are required to manage the landscape of MNEs’ FDI operations in order to maximize positive externalities accruing to the host location, as well as optimizing the allocative efficiencies involved in FDI. According to UNIDO (2003), the policy framework for FDI is a crucial part of the overall national strategy for industrialization. As the ratio of inward FDI to GDP is, in general, relatively high for developing countries in comparison to industrialized countries, the role of well-designed FDI Policy Instruments in economic development cannot be over estimated. From the out set, one needs to appreciate that when reference is made to the advantages and disadvantages of FDI Policy Instruments, it is in terms of the relative merits of the policy tools. It is also important to indicate that, from a policy perspective, the pros and cons of Policy Instruments are framed by considerations of who gains or loses. This is not a trival issue, depending not only on the demographic structure of employment distribution of the labour force in the economy, but also on the changing nature of the relative balance of competitive advantage.