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The Interaction Between FDI and Infrastructure Capital in The Development Process

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  • Farrokh Nourzad

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  • David Greenwold
  • Rui Yang

Abstract

This paper focuses on the possible interaction between foreign direct investment (FDI) and the host country’s infrastructure base. Its central hypothesis is that the effect of FDI on per capita real income depends, at least in part, on the size of the recipient country’s infrastructure. This hypothesis is tested in a panel of 46 countries and 5-year averages over the 1980–2000 period using the size of three types of infrastructure capital: telecommunication, power generation, and network of roads or highways. The results indicate that the size of the host country’s infrastructure base helps to improve the marginal effect of FDI on real income. Copyright International Atlantic Economic Society 2014

Suggested Citation

  • Farrokh Nourzad & David Greenwold & Rui Yang, 2014. "The Interaction Between FDI and Infrastructure Capital in The Development Process," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 20(2), pages 203-212, May.
  • Handle: RePEc:kap:iaecre:v:20:y:2014:i:2:p:203-212:10.1007/s11294-013-9457-5
    DOI: 10.1007/s11294-013-9457-5
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    References listed on IDEAS

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    More about this item

    Keywords

    FDI; Infrastructure capital; Economic development; F11; F43; O16;

    JEL classification:

    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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