The Effects of FDI on Growth and Inequality

Chiara Bonassi, Giorgia Giovannetti () and Giorgio Ricchiuti

Chapter 6 in Pro-Poor Macroeconomics, 2006, pp 119-143 from Palgrave Macmillan

Abstract: Abstract North-South capital flows are likely to allow countries in the South to grow independently from their (low) domestic saving rate, thereby reducing possible financial constraints to growth. They allow the financing of balance-of-payments deficits in the early stages of development, so that a country can import intermediate and capital-intensive goods, which are essential for productive capacity. They improve the allocation of domestic and foreign capital and facilitate the transfer of technology and know-how. Hence, private capital flows have the potential to boost growth and to contribute to improvements in the standard of living in developing countries. This potential does not seem to have been fully exploited yet, especially in African countries.1

Keywords: Foreign Direct Investment; Gross Domestic Product; Income Inequality; Domestic Firm; Unskilled Worker (search for similar items in EconPapers)
Date: 2006
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Persistent link: https://EconPapers.repec.org/RePEc:pal:sopchp:978-0-230-62790-1_6

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DOI: 10.1057/9780230627901_6

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