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Foreign Direct Investment as Technology Transferred: Some Panel Evidence from the Transition Economies

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Author Info
Nauro F. Campos
Yuko Kinoshita

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Abstract

Although the theoretical literature has identified various sizeable benefits from foreign direct investment inflows (FDI), the empirical literature has been unable to establish a positive and significant impact of FDI on the rates of economic growth of host countries. One reason for this difficulty is that theory equates FDI to technology transferred, while in most countries and regions of the world FDI encompasses an array of arrangements that goes well beyond pure technology transfer. This paper tests for the effects of FDI on growth in a set of countries in which FDI is purer technology transferred: the 25 Central and Eastern European and former Soviet Union transition countries between 1990 and 1998. Our main finding is that, in this more appropriate setting, FDI has a positive and significant impact on economic growth as theory predicts.

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Paper provided by William Davidson Institute at the University of Michigan Stephen M. Ross Business School in its series William Davidson Institute Working Papers Series with number 438.

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Date of creation: 01 Jan 2002
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Handle: RePEc:wdi:papers:2002-438

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Keywords: Foreign Direct Investment; economic growth; transition economy;

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This paper has been announced in the following NEP Reports: 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. repec:att:wimass:1919983 is not listed on IDEAS
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  3. Nauro F. Campos & Fabrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," William Davidson Institute Working Papers Series 470, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  4. Jonathan Temple, 1999. "The New Growth Evidence," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 112-156, March. [Downloadable!] (restricted)
  5. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October. [Downloadable!] (restricted)
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  8. Gordon H. HANSON, 2001. "Should Countries Promote Foreign Direct Investment?," G-24 Discussion Papers 9, United Nations Conference on Trade and Development. [Downloadable!]
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    Other versions:
  10. Eduardo Borensztein & Ratna Sahay & Jeromin Zettelmeyer & Andrew Berg, 1999. "The Evolution of Output in Transition Economies - Explaining the Differences," IMF Working Papers 99/73, International Monetary Fund.
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    Other versions:
  12. Bevan, Alan & Estrin, Saul, 2000. "The Determinants of Foreign Direct Investment in Transition Economies," CEPR Discussion Papers 2638, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
  13. Erich Gundlach, 2003. "Growth Effects of EU Membership: The Case of East Germany," Empirica, Springer, vol. 30(3), pages 237-270, September. [Downloadable!] (restricted)
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  16. Lensink, R. & Morrissey, O., 2001. "Foreign direct investment: flows, volatility and growth in developing countries," Research Report 01E16, University of Groningen, Research Institute SOM (Systems, Organisations and Management). [Downloadable!]
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Full references

Cited by:
(explanations, 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. Abdur R. Chowdhury, 2003. "Private Savings In Transition Economies: Are There Terms Of Trade Shocks?," William Davidson Institute Working Papers Series 2003-572, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
  2. Aleksynska, Mariya & Gaisford, James & Kerr, William, 2003. "Foreign Direct Investment and Growth in Transition Economies," MPRA Paper 7668, University Library of Munich, Germany, revised Dec 2003. [Downloadable!]
  3. Dierk Herzer & Stephan Klasen & Felicitas Nowak-Lehmann D., 2006. "In search of FDI-led growth in developing countries," Ibero America Institute for Econ. Research (IAI) Discussion Papers 150, Ibero-America Institute for Economic Research. [Downloadable!]
    Other versions:
  4. Stanisic, Nenad & Jankovic, Nenad, 2006. "Attraction of Foreign Direct Investments as a Challenge in Accession Process to European Union," MPRA Paper 4844, University Library of Munich, Germany. [Downloadable!]
  5. Bichaka Fayissa & Christian Nsiah & Prathibha V. Joshi, 2008. "Perceived Financial Risk and Divergence in the Economic Growth of Sub-Saharan African Countries," Working Papers 200804, Middle Tennessee State University, Department of Economics and Finance. [Downloadable!]
  6. Elvira Sapienza, 2009. "FDI and Growth in Central and Southern Eastern Europe," Quaderni DSEMS 12-2009, Dipartimento di Scienze Economiche, Matematiche e Statistiche, Universita' di Foggia. [Downloadable!]
  7. Mei Wen, 2005. "Foreign Direct Investment, Regional Geographical and Market Conditions, and Regional Development: A Panel Study on China," Departmental Working Papers 2005-12, Australian National University, Economics RSPAS. [Downloadable!]
  8. Chowdhury, Abdur R., 2003. "Do asymmetric terms of trade shocks affect private savings in a transition economy?," BOFIT Discussion Papers 3/2003, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  9. Stanisic, Nenad, 2008. "Do Foreign Direct Investments Increase the Economic Growth of Southeastern European Transition Economies?," MPRA Paper 8875, University Library of Munich, Germany. [Downloadable!]
  10. Nauro F. Campos & Fabrizio Coricelli, 2002. "Growth in Transition: What We Know, What We Don't, and What We Should," William Davidson Institute Working Papers Series 470, William Davidson Institute at the University of Michigan Stephen M. Ross Business School. [Downloadable!]
    Other versions:
  11. Égert, Balázs & Morales-Zumaquero, Amalia, 2005. "Exchange rate regimes, foreign exchange volatility and export performance in Central and Eastern Europe: Just another blur project?," BOFIT Discussion Papers 8/2005, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
    Other versions:
  12. Abdur R. Chowdhury, 2003. "Do asymmetric terms of trade shocks affect private savings in a transition economy?," Macroeconomics 0303006, EconWPA. [Downloadable!]
  13. Monnet Gbakou & Mustapha Sadni Jallab & René Sandretto, 2008. "Foreign Direct Investment, Macroeconomic Instability And Economic Growth in MENA Countries," Post-Print halshs-00303694_v1, HAL. [Downloadable!]
    Other versions:
  14. Artelaris, Panagiotis & Arvanitidis, Paschalis & Petrakos, George, 2006. "Theoretical and Methodological Study on Dynamic Growth Regions and Factors Explaining their Growth Performance," Papers DYNREG02, Economic and Social Research Institute (ESRI). [Downloadable!]
  15. Robert E. Lipsey, 2002. "Home and Host Country Effects of FDI," NBER Working Papers 9293, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  16. Muhammad Arshad Khan, 2007. "Foreign Direct Investment and Economic Growth: The Role of Domestic Financial Sector," PIDE-Working Papers 2007:18, Pakistan Institute of Development Economics. [Downloadable!]
  17. Valentina HARTARSKA & Henry THOMPSON, 2008. "Foreign Investment and Transition in Central/Eastern Europe along the Phase Curve," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 8(2), pages 67-78. [Downloadable!] (restricted)
  18. Oscar Bajo-Rubio & Carmen Díaz-Mora & Carmen Díaz-Roldán, 2007. "Foreign direct investment and regional growth: An analysis of the Spanish case," Working Papers 07-08, Spanish Chapter of the International Economics and Finance Society. [Downloadable!]
  19. Merlevede, Bruno & Schoors, Koen, 2005. "On the Speed of Economic Reform: Tale of the Tortoise and the Hare," BOFIT Discussion Papers 11/2005, Bank of Finland, Institute for Economies in Transition. [Downloadable!]
  20. Goran Vuksic, 2005. "Impact of foreign direct investment of Croatian manufacturing exports," Financial Theory and Practice, Institute of Public Finance, vol. 29(2), pages 131-158. [Downloadable!]
  21. Anna Iara, 2005. "Regional growth in Hungary - The impact of European economic integration," ERSA conference papers ersa05p342, European Regional Science Association. [Downloadable!]
  22. Robert E. Lipsey, 2006. "Measuring the Impacts of FDI in Central and Eastern Europe," NBER Working Papers 12808, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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