The long-run effect of foreign direct investment on total factor productivity in developing countries: A panel cointegration analysis

Dierk Herzer

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: This paper examines the long-run effect of the level of foreign direct investment (FDI) on the level of total factor productivity (TFP) for 70 developing countries for the period 1981-2011 using panel cointegration techniques. It is found that (i) FDI has, on average, a negative long-run effect on TFP in developing countries; (ii) causality runs in only one direction, from FDI to TFP, and (iii) the long-run effect of FDI of TFP differs between selected groups of countries: while the estimated long-run FDI-TFP coefficients are significantly negative for subsamples of countries with lower levels of human capital, financial development, and trade openness, the coefficients are insignificant or significantly positive for subgroups of countries with higher levels of human capital, financial development, and trade openness.

JEL-codes: C23 F21 O47 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-cse, nep-eff and nep-int
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: The long-run effect of foreign direct investment on total factor productivity in developing countries: a panel cointegration analysis (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc15:112827

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