FDI Flows to Low-Income Countries: Global Drivers and Growth Implications
AbstractWhat accounts for variations in FDI flows from advanced to developing countries? How have FDI inflows explained cross-country growth experiences? In this paper we tackle both these questions empirically for a large sample of middle and low-income countries. Two key results emerge: (i) lower borrowing costs and positive real-side external factors were increasingly important drivers of FDI outflows to low-income countries in the pre-crisis period; (ii) economic fundamentals, the strength of economic reforms, and commitment to macroeconomic discipline are crucial determinants of the growth dividends of FDI. Our paper suggests that low-income countries can turn to domestic policy solutions to mitigate the adverse effects of a potential decline in FDI in the post-crisis world.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 10/132.
Date of creation: 01 Jun 2010
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This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-17 (All new papers)
- NEP-FDG-2010-07-17 (Financial Development & Growth)
- NEP-IFN-2010-07-17 (International Finance)
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