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The Positive Causal Impact of Foreign Direct Investment on Productivity: A Not So Typical Relationship

Author

Listed:
  • Rodolphe Desbordes

    (Department of Economics, University of Strathclyde)

  • Vincenzo Verardi

    (University of Namur (CRED) and Université Libre de Bruxelles (ECARES and CKE).)

Abstract

Previous research has argued that foreign direct investment (FDI) exerts a positive and causal impact on the productivity of the recipient countries. However, we find that there is little macroeconomic evidence that FDI fosters productivity growth in recipient countries, including in those with high absorptive capacity, once we use an instrumental variables (IV) estimator robust to outliers.

Suggested Citation

  • Rodolphe Desbordes & Vincenzo Verardi, 2011. "The Positive Causal Impact of Foreign Direct Investment on Productivity: A Not So Typical Relationship," Working Papers 1106, University of Strathclyde Business School, Department of Economics.
    • Handle: RePEc:str:wpaper:1106
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    More about this item

    Keywords

    Foreign Direct Investment; Productivity; Robust Regression.;
    All these keywords.

    JEL classification:

    • C2 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables
    • F2 - International Economics - - International Factor Movements and International Business
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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