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The Influence of Foreign Direct Investment on Productivity: An Institutional Perspective

Author

Listed:
  • Canh Phuc Nguyen
  • Nguyen Ai Nhi
  • Christophe Schinckus
  • Thanh Dinh Su

    (University of Economics Ho Chi Minh City, Vietnam)

Abstract

This study examines the roles of institutional quality on the relationship between FDIs and productivity. Generally speaking, our estimates confirm the existing empirical studies on this issue. Our contribution refers to the analysis of the combined effect of FDIs (in different forms) with the institutional quality indicators. Notably, we observe that the flows of inward FDIs have a positive effect on the TFP growth if the host countries have good institutional quality but the same inward FDIs might have a negative impact if the host countries’ institutions are well developed.

Suggested Citation

  • Canh Phuc Nguyen & Nguyen Ai Nhi & Christophe Schinckus & Thanh Dinh Su, 2021. "The Influence of Foreign Direct Investment on Productivity: An Institutional Perspective," Review of Development Finance Journal, Chartered Institute of Development Finance, vol. 11(1), pages 35-45.
    • Handle: RePEc:afj:journ3:v:11:y:2021:i:1:p:35-45
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    File URL: https://journals.co.za/doi/abs/10.10520/ejc-rdfin-v11-n1-a3
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    Citations

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    Cited by:

    1. Muhammad Kamran Khan & Hai Hong Trinh & Ikram Ullah Khan & Subhan Ullah, 2022. "Sustainable economic activities, climate change, and carbon risk: an international evidence," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 24(7), pages 9642-9664, July.
    2. Addis Yimer, 2023. "When does FDI make a difference for growth? A comparative analysis of resource‐rich and resource‐scarce African economies," International Finance, Wiley Blackwell, vol. 26(1), pages 82-110, April.

    More about this item

    Keywords

    Institutions; FDI; Productivity; Spillover effects;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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