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Foreign direct investment and economic growth: some evidence from across the world

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Author Info
Anita Ghatak
Ferda Halicioglu

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Abstract

This study is concerned with Foreign Direct Investment (FDI) and economic growth across the world for the period 1991?2001. This article produces fresh empirical evidence on the relation between FDI and economic growth obtained from single-equation and simultaneous-equation estimates for 140 countries using macroeconomic variables. The results indicate that a positive and statistically significant estimate of coefficient of FDI is obtained from single-equation ordinary least squares method for real per capita GDP regressions in all but one case. There exists a positive and statistically significant relation between the real per capita GDP and FDI in the case of many countries but correlation coefficient between exports-GDP ratio and percentage FDI is found to be insignificant. Country risk rating and the telecommunications variables are significant in all the relevant regressions and correlation estimates.

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File URL: http://inderscience.metapress.com/link.asp?target=contribution&id=D124W57758157912
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Publisher Info
Article provided by Inderscience Enterprises Ltd in its journal Global Business and Economics Review.

Volume (Year): 9 (2007)
Issue (Month): 4 (January)
Pages: 381-394
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Handle: RePEc:mes:gbusec:v:9:y:2007:i:4:p:381-394

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Web page: http://inderscience.metapress.com/link.asp?target=journal&id=119796

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Related research
Keywords: foreign direct investment; FDI; multinational corporations; MNCs; composite risk rating; instrumental variable method; omitted variable method; simultaneous equation method; economic growth; per capita GDP; exports; country risk rating; telecommunications variables;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Bruno, Michael & Easterly, William, 1998. "Inflation crises and long-run growth," Journal of Monetary Economics, Elsevier, vol. 41(1), pages 3-26, February. [Downloadable!] (restricted)
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  2. Kevin Sylwester, 2005. "Foreign direct investment, growth and income inequality in less developed countries," International Review of Applied Economics, Taylor and Francis Journals, vol. 19(3), pages 289-300, July. [Downloadable!] (restricted)
  3. Root, Franklin R & Ahmed, Ahmed A, 1979. "Empirical Determinants of Manufacturing Direct Foreign Investment in Developing Countries," Economic Development and Cultural Change, University of Chicago Press, vol. 27(4), pages 751-67, July.
  4. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January. [Downloadable!] (restricted)
  5. Ghatak, A., 1997. "Vector Autoregression Modelling and Forecasting Growth of South Korea," Department of Economics, De Montford University 97-02, Department of Economics, De Montfort University.
  6. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2004. "FDI and economic growth: the role of local financial markets," Journal of International Economics, Elsevier, vol. 64(1), pages 89-112, October. [Downloadable!] (restricted)
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  7. Anita Ghatak, 1998. "Vector autoregression modelling and forecasting growth of South Korea," Journal of Applied Statistics, Taylor and Francis Journals, vol. 25(5), pages 579-592, October. [Downloadable!] (restricted)
  8. Gupta, Vinod K, 1983. "A Simultaneous Determination of Structure, Conduct and Performance in Canadian Manufacturing," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 281-301, July. [Downloadable!] (restricted)
  9. Ewe-Ghee Lim, 2001. "Determinants of, and the Relation Between, Foreign Direct Investment and Growth: A Summary of the Recent Literature," IMF Working Papers 01/175, International Monetary Fund. [Downloadable!]
  10. Eduardo Borensztein & Jong-Wha Lee & Jose De Gregorio, 1994. "How Does Foreign Direct Investment Affect Economic Growth," IMF Working Papers 94/110, International Monetary Fund.
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  11. Blomstrom, Magnus, 1986. "Foreign Investment and Productive Efficiency: The Case of Mexico," Journal of Industrial Economics, Blackwell Publishing, vol. 35(1), pages 97-110, September. [Downloadable!] (restricted)
  12. Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February. [Downloadable!] (restricted)
  13. Biswas, Romita, 2002. "Determinants of Foreign Direct Investment," Review of Development Economics, Blackwell Publishing, vol. 6(3), pages 492-504, October. [Downloadable!] (restricted)
  14. Romer, Paul M, 1990. "Endogenous Technological Change," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S71-102, October. [Downloadable!] (restricted)
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