Financial sector FDI and host countries: new and old lessons

Linda Goldberg

Economic Policy Review, 2007, vol. 13, issue Mar, 17 pages

Abstract: Foreign direct investment (FDI) into the financial sectors of emerging economies soared during the 1990s, leaving many countries with banking sectors owned primarily by foreign institutions. While the implications of FDI into emerging markets are well documented, less clearly understood is how the host countries are affected by financial sector FDI specifically. An understanding of this relationship is crucial for countries formulating policy with respect to foreign banks. This article argues that many lessons learned from work on FDI into manufacturing and primary resource industries apply directly to host-country financial sectors. The author provides evidence on such themes as technology transfers, productivity spillovers, wage effects, macroeconomic growth, and fiscal policy to show that financial sector FDI into emerging markets generally has positive effects on the host countries. In banking and finance specifically, she argues that financial sector FDI can potentially strengthen institutional development through improvements to regulation and supervision.

Keywords: International finance; Emerging markets; Banks and banking, Foreign; Investments, Foreign (search for similar items in EconPapers)
Date: 2007
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (60)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/epr/07v13n1/0703gold.html (text/html)
https://www.newyorkfed.org/medialibrary/media/research/epr/07v13n1/0703gold.pdf (application/pdf)

Related works:
Working Paper: Financial-Sector FDI and Host Countries: New and Old Lessons (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fip:fednep:y:2007:i:mar:p:1-17:n:v.13no.1

Ordering information: This journal article can be ordered from

Access Statistics for this article

More articles in Economic Policy Review from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().