FDI, Regulations and Growth

Matthias Busse and José Luis Groizard

No 331335, Conference papers from Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project

Abstract: The paper explores the linkage between income growth rates and Foreign Direct Investment (FDI) inflows. So far the evidence is rather mixed, as no robust relationship between FDI and growth has been established. We argue that countries need a sound business environment in the form of good government regulations to be able to benefit from FDI. Using a comprehensive dataset for regulations and standard cross-sectional regression analysis, we test this hypothesis and find evidence that excessive regulations restrict growth through FDI only in the most regulated economies. This result holds true for different specifications of the econometric model, including instrumental variable regressions.

Keywords: Research Methods/Statistical Methods; Research and Development/Tech Change/Emerging Technologies (search for similar items in EconPapers)
Pages: 27
Date: 2005
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https://ageconsearch.umn.edu/record/331335/files/1828.pdf (application/pdf)

Related works:
Working Paper: FDI, Regulations and Growth (2006)
Working Paper: FDI, Regulations and Growth (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:pugtwp:331335

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