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FDI, Finance and Growth:Further Empirical Evidence from a Panel of 73 Countries

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  • Dimitrios Asteriou
  • Argiro Moudatsou

Abstract

The aim of this study is to investigate whether the level of financial development can make a significant contribution to the Foreign Direct Investment¡¯s (FDI) positive impact on economic growth. In other words, to examine whether the contribution of FDI on growth is relatively more important in countries with well-developed financial markets compared to those with the less-developed ones. The time period of the empirical research spans from 1988-2009, using yearly macroeconomic data for a sample of 73 developing countries. Our empirical methodology consists of panel-growth regressions. Our results suggest that the FDI make substantial contribution to growth where financial systems function effectively, such as high-income countries, while the FDI impact is found to be insignificant in cases where relatively weaker financial systems exist.

Suggested Citation

  • Dimitrios Asteriou & Argiro Moudatsou, 2014. "FDI, Finance and Growth:Further Empirical Evidence from a Panel of 73 Countries," Applied Economics and Finance, Redfame publishing, vol. 1(2), pages 48-57, November.
    • Handle: RePEc:rfa:aefjnl:v:1:y:2014:i:2:p:48-57
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    More about this item

    Keywords

    Foreign Direct Investment; Financial Development; Panel Data Regressions;
    All these keywords.

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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