The foreign direct investment–economic growth nexus

Sasi Iamsiraroj

International Review of Economics & Finance, 2016, vol. 42, issue C, 116-133

Abstract: The nexus between foreign direct investment (FDI) and economic growth has been a long-standing debate from mixed empirical findings. There is also a possibility of a bi-directional relationship between FDI and economic growth. This paper investigates FDI–growth associations using a simultaneous system of equations approach of 124 cross-country data for the period 1971–2010. Results from the estimation indicate that overall effects of FDI are positively associated with growth and vice versa; whereas labor force, trade openness and economic freedom are other key determinants of FDI, which in turn stimulate income growth further.

Keywords: Foreign direct investment; Economic growth; Paneldata (search for similar items in EconPapers)
JEL-codes: F21 O11 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (87)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:42:y:2016:i:c:p:116-133

DOI: 10.1016/j.iref.2015.10.044

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