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Comments on “Growth and the Quality of Foreign Direct Investment” by Laura Alfaro and Andrew Charlton

Ann Harrison ()

Chapter 3.4 in The Industrial Policy Revolution I, 2013, pp 205-208 from Palgrave Macmillan

Abstract: Abstract This paper explores the notion that not all types of foreign direct investment are created equal. In particular, the paper makes two important contributions. First, the authors document a persistent use of industrial policy in targeting certain forms of incoming foreign investment. Countries favor some types of foreign investment over others through tax holidays, regulations, investment promotion, and facilitation of entry. Second, the authors then identify whether targeted foreign direct investment (FDI) results in higher growth. They find that it does. They also find that FDI in credit-constrained sectors or sectors with more human capital leads to higher growth. These results are robust to correcting for endogeneity of FDI.

Keywords: Foreign Direct Investment; Foreign Investment; Industrial Policy; NBER Working Paper; Foreign Direct Investment Inflow (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1057/9781137335173_13

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