The Effect of Foreign Direct Investment on Economic Growth

Sergey Kondyan () and Karine Yenokyan
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Sergey Kondyan: Nazarbayev University
Karine Yenokyan: Johns Hopkins University

Eastern Economic Journal, 2019, vol. 45, issue 4, No 3, 532-564

Abstract: Abstract We develop a theoretical model that studies the effects of FDI on growth in the absence of channels through which the spillover effects of FDI operate. By isolating the effects of FDI, we examine how FDI affects growth through its primary function of capital accumulation. Untangling the growth effects of FDI operating through capital accumulation from the spillover effects of FDI can help explain the ambiguity in the empirical evidence on the subject. The transitional dynamics are characterized by the interdependence of the variables of the source and recipient countries. We study the dynamic system through the model calibration analysis.

Keywords: Foreign direct investment; Growth; Transitional dynamics (search for similar items in EconPapers)
JEL-codes: F15 O4 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1057/s41302-019-00140-9

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