Foreign direct investment, host country factors and economic growth

Edna Maeyen Solomon

No 9670, Greenwich Papers in Political Economy from University of Greenwich, Greenwich Political Economy Research Centre

Abstract: This paper analyses how the levels of economic development, human capital, financial development and the qualities of the economic and political environments in host countries simultaneously affects the impact of aggregate inflows of Foreign Direct Investment (FDI) on economic growth. Multiple interaction terms are employed between inward FDI and each of the host country factors mentioned above. The System GMM estimator is applied to a panel of 111 countries from 1981 to 2005. The results show that the level of economic development, human capital and quality of the political environment all significantly affect the relationship between inward FDI and growth.

Keywords: Foreign direct investment; FDI; Economic growth; Panel data analysis; Economic growth; Host country factors; System GMM (search for similar items in EconPapers)
Date: 2011-05
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Citations: View citations in EconPapers (13)

Published in Ensayos Revista de Economia 1.XXX(2011): pp. 41-70

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Persistent link: https://EconPapers.repec.org/RePEc:gpe:wpaper:9670

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