HOW DOES FOREIGN DIRECT INVESTMENT AFFECT GROWTH IN DEVELOPING COUNTRIES? AN EMPIRICAL INVESTIGATION

E. M. Ekanayake and John R. Ledgerwood

The International Journal of Business and Finance Research, 2010, vol. 4, issue 3, 43-53

Abstract: This paper analyzes the effects of foreign direct investment on the economic growth of developing countries. The study uses annual data on a group of 85 developing countries covering Asia, Africa, and Latin America and the Caribbean for the period 1980-2007. We explore the hypothesis that foreign direct investment can promote growth in developing countries. We test this hypothesis using panel data series for foreign direct investment, while accounting for regional differences in Asian, African, Latin American, and the Caribbean countries as well as the differences in income levels. While the findings of previous studies are generally mixed, our results indicate that foreign direct investment has positive and significant effect on economic growth.

Keywords: Foreign direct investment; developing countries; economic growth (search for similar items in EconPapers)
JEL-codes: F21 F43 O40 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:ibf:ijbfre:v:4:y:2010:i:3:p:43-53

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