THE EFFECT OF FOREIGN DIRECT INVESTMENT ON ECONOMIC GROWTH: THE INSTITUTIONAL THRESHOLD

Ines Trojette ()
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Ines Trojette: LEAD, University of Toulon

Region et Developpement, 2016, vol. 43, 111-138

Abstract: This paper examines whether the effect of foreign direct investment on economic growth is dependent upon the institutional level for five regions (SSA, MENA, Europe, Asia and America). Using GMM system covering the period from 1984-2013, our results highlight the role of institutional develop-ment in moderating the ambiguous impacts of FDI on GDP growth. Under the threshold regression, technique developed by Caner and Hansen (2004) we find that the index of institutions matter for all groups except for the America group. The fact of taking the components of institutions reveal that above the threshold of government stability and the respect of law and order FDI enhances GDP growth.

Keywords: FOREIGN DIRECT INVESTMENT; GROWTH; INSTITUTIONAL DEVELOPMENT; THRESHOLD EFFECT (search for similar items in EconPapers)
JEL-codes: C34 F21 F43 O16 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (8)

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