Foreign direct investment, capital accumulation, and growth: The rise of the Emerging South

Firat Demir and Sunhyung Lee

International Review of Economics & Finance, 2022, vol. 80, issue C, 779-794

Abstract: Using a unique dataset on bilateral FDI flows between 1990 and 2012, we analyze the heterogeneous growth effects of FDI originating from the North, the Emerging South, and the South in each country group. After controlling for the aggregation bias, sample selection bias, country heterogeneity, and endogeneity issues, and using various estimation techniques and robustness tests, we detect no long-run effects of FDI on the host country per capita GDP growth, independent of its direction. However, we find a significantly positive effect on long-run levels of GDP per capita in the sub-country groups of North–North, Emerging-North, and South-Emerging. The effects are stronger for countries with similar institutional development levels.

Keywords: Foreign direct investment; Economic growth; North–South heterogeneity; Capital accumulation (search for similar items in EconPapers)
JEL-codes: F44 O47 P33 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:80:y:2022:i:c:p:779-794

DOI: 10.1016/j.iref.2022.02.044

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