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Outward FDI and economic growth

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  • Dierk Herzer

Abstract

Purpose - The purpose of this paper is to examine the impact of outward foreign direct investment (FDI) on economic growth. Design/methodology/approach - Two econometric approaches are used: cross-country regressions for a sample of 50 countries and time-series estimators for the USA. Findings - Both approaches tell the same story: outward FDI is positively associated with growth. This finding is robust to several model specifications, potential outliers, and different estimation techniques. In addition, Granger-causality tests for the USA indicate that causality is bidirectional, suggesting that increased outward FDI is both a cause and a consequence of increased domestic output. Originality/value - Previous studies have primarily examined the firm- and industry-level effects of outward FDI – for example, on domestic investment, employment, and productivity. This paper, in contrast, deals with the effects of aggregate outward FDI on the economy as a whole.

Suggested Citation

  • Dierk Herzer, 2010. "Outward FDI and economic growth," Journal of Economic Studies, Emerald Group Publishing, vol. 37(5), pages 476-494, September.
  • Handle: RePEc:eme:jespps:v:37:y:2010:i:5:p:476-494
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    Cited by:

    1. repec:ris:utmsje:0205 is not listed on IDEAS
    2. repec:onb:oenbmp:y:2017:i:q1/2017:b:6 is not listed on IDEAS
    3. repec:eee:phsmap:v:482:y:2017:i:c:p:127-146 is not listed on IDEAS
    4. repec:eee:iburev:v:26:y:2017:i:5:p:839-854 is not listed on IDEAS
    5. Desbordes, Rodolphe & Wei, Shang-Jin, 2017. "The effects of financial development on foreign direct investment," Journal of Development Economics, Elsevier, vol. 127(C), pages 153-168.
    6. repec:kap:iecepo:v:14:y:2017:i:2:d:10.1007_s10368-016-0371-1 is not listed on IDEAS
    7. Herzer, Dierk & Nunnenkamp, Peter, 2011. "Income inequality and health: New evidence from panel data," Kiel Working Papers 1736, Kiel Institute for the World Economy (IfW).

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