The Elusive Link Between FDI and Economic Growth

• Tác giả: Agustín Bénétrix
• Ngôn ngữ: eng
• Ký hiệu phân loại: 338.9 Economic development and growth
• Thông tin xuất bản: World Bank, 2023
• Bộ sưu tập: Tài liệu truy cập mở
• ID: 306329
• Chủ đề: 1. ECONOMIC GROWTH; 2. FINANCIAL DEVELOPMENT; 3. FINANCIAL SECTOR DEVELOPMENT; 4. FOREIGN DIRECT INVESTMENT (FDI); 5. HUMAN CAPITAL

Tóm tắt

This paper revisits the link between FDI and economic growth in emerging and developing economies. Analysis of the early decades of the sample shows that there is no statistically significant correlation between FDI and growth for countries with average levels of education or financial depth. In line with previous contributions, this correlation is positive and statistically significant for countries with sufficiently well-developed financial sectors or high levels of human capital. However, the findings also show that the link between FDI and growth varies over time. For more recent periods, there is a positive and statistically significant relationship between FDI and growth for the average country, with local conditions having a negative effect on this link. The paper also develops a novel instrument aimed at addressing the endogeneity of FDI inflows. Instrumental variable estimates suggest that the results are unlikely to be driven by endogeneity, and the results on the role of absorptive capacities may be due to the GVC revolution in the 1990s.