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Foreign direct investment and income convergence

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  • Changkyu Choi

Abstract

The role of foreign direct investment (FDI) in the convergence of income level and growth has been investigated by panel data regressions. Bilateral FDI data from OECD from 1982 to 1997 is used. Income level and growth gaps between source and host countries turn out to decrease as bilateral FDI increases. It is also found that geographical closeness and common language play an important role in convergence in income level and growth.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/0003684042000246759
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 36 (2004)
Issue (Month): 10 ()
Pages: 1045-1049

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Handle: RePEc:taf:applec:v:36:y:2004:i:10:p:1045-1049

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References

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  1. Lee, M. & Longmire, R. & Matyas, L. & Harris, M., 1996. "Growth Convergence: Some Panel Data Evidence," Monash Econometrics and Business Statistics Working Papers 14/96, Monash University, Department of Econometrics and Business Statistics.
  2. Greasley, David & Oxley, Les, 1997. "Time-series based tests of the convergence hypothesis: Some positive results," Economics Letters, Elsevier, vol. 56(2), pages 143-147, October.
  3. Dan Ben-David & Ayal Kimhi, 2000. "Trade and the Rate of Income Convergence," NBER Working Papers 7642, National Bureau of Economic Research, Inc.
  4. Razin, Assaf & Yuen, Chi-Wa, 1997. "Income convergence within an economic union: the role of factor mobility and coordination," Journal of Public Economics, Elsevier, vol. 66(2), pages 225-245, November.
  5. Hughes Hallett, A. & Piscitelli, Laura, 2002. "Does trade integration cause convergence?," Economics Letters, Elsevier, vol. 75(2), pages 165-170, April.
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Citations

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Cited by:
  1. Ji Kim, 2005. "Convergence hypothesis of regional income in Korea," Applied Economics Letters, Taylor & Francis Journals, vol. 12(7), pages 431-435.
  2. Lee, Hsiu-Yun & Lin, Kenneth S. & Tsui, Hsiao-Chien, 2009. "Home country effects of foreign direct investment: From a small economy to a large economy," Economic Modelling, Elsevier, vol. 26(5), pages 1121-1128, September.
  3. Marouane ALAYA (GREThA-GRES) & Dalila NICET-CHENAF (GREThA-GRES) & Eric ROUGIER (GREThA-GRES), 2007. "FDI Promotion policies and dynamic of growth in the South East Mediterranean countries (In French)," Cahiers du GRES 2007-13, Groupement de Recherches Economiques et Sociales.
  4. Yao, Shujie & Wei, Kailei, 2007. "Economic growth in the presence of FDI: The perspective of newly industrialising economies," Journal of Comparative Economics, Elsevier, vol. 35(1), pages 211-234, March.
  5. Alexe, Ileana & Tatomir, Cristina F., 2011. "Does economic convergence with the European Union mean more FDI flows to an economy? Analysis on 5 Central and Eastern Europe countries," MPRA Paper 36139, University Library of Munich, Germany.
  6. Xu, WeiGuo & Hu, DaiPing & Lei, AiZhong & Shen, HuiZhang, 2008. "FDI chaos and control in China," Research in International Business and Finance, Elsevier, vol. 22(1), pages 17-28, January.
  7. Changkyu Choi, 2009. "Does Bilateral Trade Lead To Income Convergence? Panel Evidence," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 34(1), pages 71-79, June.
  8. Alaya MAROUANE (Université of Tunis) & Dalila NICET-CHENAF (GREThA UMR CNRS 5113) & Eric ROUGIER (GREThA UMR CNRS 5113), 2008. "The law of growth and attraction: an endogenous model of absorptive capacities, FDI and income for MENA countries," Cahiers du GREThA 2008-27, Groupe de Recherche en Economie Théorique et Appliquée.
  9. Sumru Oz, 2014. "Diffusion of Technology and Convergence of Income among Countries," Koç University-TUSIAD Economic Research Forum Working Papers 1407, Koc University-TUSIAD Economic Research Forum.
  10. Shujie Yao, 2006. "On economic growth, FDI and exports in China," Applied Economics, Taylor & Francis Journals, vol. 38(3), pages 339-351.

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