The Asian economic crisis of 1997 gives us a valuable lesson that foreign direct investment (FDI) can play a more important role in promoting economic stability than other capital flows such as bank lending and portfolio equity investment. This paper explains the relationships between FDI and the crisis. Specifically, it studies the role of FDI in stable economic growth. Recent developments of inward FDI policies by the Asian member economies of APEC are then analyzed, after which they are categorized into four groups within a framework that is developed in this paper. Some important, generalized implications for FDI policies are also provided.