The Effects of FDI and Public Expenditure on Economic Growth: From Theoretical Model to Empirical Evidence

Manh Vu Le and Terukazu Suruga

No 2, GSICS Working Paper Series from Graduate School of International Cooperation Studies, Kobe University

Abstract: The existing endogenous growth theory considers either the effects of FDI or public expenditures on economic growth separately. As far as we concerned, no theoretical growth model has taken into account the interaction effect of these two factors. As found out by Le and Suruga (forthcoming), there is evidence that excessive spending in public expenditures can hinder the beneficial impact of FDI. This article examines some other potential relationships between FDI and public expenditure and proposes that more efforts should be contributed in building a theoretical model which presents the interrelationship between these factors in determining the long-term economic growth rate.

Keywords: Theory; Foreign direct investment; Public expenditures; Economic growth (search for similar items in EconPapers)
JEL-codes: E62 F21 F43 H50 O40 (search for similar items in EconPapers)
Pages: 12 pages
Date: 2005-11
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:kcs:wpaper:2

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