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Inappropriate Pooling of Wealthy and Poor Countries in Empirical FDI Studies

Bruce Blonigen and Miao Wang ()

No 903, Working Papers and Research from Marquette University, Center for Global and Economic Studies and Department of Economics

Abstract: This paper examines the question of whether less-developed countries' (LDCs') experiences with foreign direct investment (FDI) systematically different from those of developed countries (DCs). We do this by examining three types of empirical FDI studies that typically do not distinguish between LDCs and DCs in their analysis. First, we find that the underlying factors that determine the location of FDI activity across countries vary systematically across LDCs and DCs in a way that is not captured by current empirical models of FDI. Second, the effect of FDI on economic growth is one that is only supported for LDCs in the aggregate data, not DCs. Third, the evidence suggests that FDI is much less likely to crowd out (more likely to crowd in) domestic investment for LDCs than DCs.

JEL-codes: F2 H2 O4 (search for similar items in EconPapers)
Date: 2004-03
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Published in T. Moran, E. Graham and M. Blomstrom (eds.), Does Foreign Direct Investment Promote Development? Washington, DC: Institute for International Economics, 2005, pages 221-224

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http://www.nber.org/papers/w10378.pdf First version, 2004 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:mrq:wpaper:0903

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