Absorptive Capacities and the Impact of FDI on Economic Growth
This paper analyzes the necessary local conditions required for the existence of positive spillovers from multinationals' entry and it consists of a unified study of absorptive capacities. We start from the idea that FDI speeds up the diffusion of technologies across countries. Yet, the question that arises is: to what extent are these advanced technologies absorbed and successfully internalized by the receiving countries such that they materialize in welfare gains? The impact of FDI depends on the country specific absorptive capacity. We first interact FDI individually with different growth determinants and we find that the contribution of FDI to economic growth is positive and significant depending on the level of human capital and the development of financial markets, but its presence in developing countries must complement rather than substitute a set of other growth determinants. Then we test the robustness of the linear interaction terms relative to each other and we analyze the set of conditions that are most beneficial for FDI.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.diw.de/en
More information through EDIRC
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.:
- V N Balasubramanyam & M Salisu & David Sapsford., .
"Foreign Direct Investment and Growth in EP and IS Countries,"
ec18/94, Department of Economics, University of Lancaster.
- Balasubramanyam, V N & Salisu, M & Sapsford, David, 1996. "Foreign Direct Investment and Growth in EP and IS Countries," Economic Journal, Royal Economic Society, vol. 106(434), pages 92-105, January.
- Kiminori Matsuyama, 2002.
"Financial Market Globalization, Symmetry-Breaking, and Endogenous Inequality of Nations,"
CIRJE-F-186, CIRJE, Faculty of Economics, University of Tokyo.
- Kiminori Matsuyama, 2004. "Financial Market Globalization, Symmetry-Breaking, and Endogenous Inequality of Nations," Econometrica, Econometric Society, vol. 72(3), pages 853-884, 05.
- Gourinchas, Pierre-Olivier & Jeanne, Olivier, 2003.
"The Elusive Gains from International Financial Integration,"
CEPR Discussion Papers
3902, C.E.P.R. Discussion Papers.
- Pierre-Olivier Gourinchas & Olivier Jeanne, 2006. "The Elusive Gains from International Financial Integration," Review of Economic Studies, Oxford University Press, vol. 73(3), pages 715-741.
- Pierre-Olivier Gourinchas & Olivier Jeanne, 2004. "The Elusive Gains From International Financial Integration," IMF Working Papers 04/74, International Monetary Fund.
- Pierre-Olivier Gourinchas & Olivier Jeanne, 2003. "The Elusive Gains from International Financial Integration," NBER Working Papers 9684, National Bureau of Economic Research, Inc.
- Geert Bekaert & Campbell R. Harvey & Christian Lundblad, 2004.
"Does Financial Liberalization Spur Growth?,"
Working Paper Research
53, National Bank of Belgium.
- Markusen, James R. & Venables, Anthony J., 1999.
"Foreign direct investment as a catalyst for industrial development,"
European Economic Review,
Elsevier, vol. 43(2), pages 335-356, February.
- James R. Markusen & Anthony J. Venables, 1997. "Foreign Direct Investment as a Catalyst for Industrial Development," NBER Working Papers 6241, National Bureau of Economic Research, Inc.
- Maurice Kugler, 2006.
"Spillovers From Foreign Direct Investment:Within Or Between Industries?,"
BORRADORES DE ECONOMIA
003523, BANCO DE LA REPÚBLICA.
- Kugler, Maurice, 2006. "Spillovers from foreign direct investment: Within or between industries?," Journal of Development Economics, Elsevier, vol. 80(2), pages 444-477, August.
- Maurice Kugler, . "Spillovers from Foreign Direct Investment: Within or between Industries?," Borradores de Economia 369, Banco de la Republica de Colombia.
- Magnus Blomstrom & Robert E. Lipsey & Mario Zejan, 1992. "What Explains Developing Country Growth?," NBER Working Papers 4132, National Bureau of Economic Research, Inc.
- Xu, Bin, 2000. "Multinational enterprises, technology diffusion, and host country productivity growth," Journal of Development Economics, Elsevier, vol. 62(2), pages 477-493, August.
- Chris Papageorgiou & Subir Lall & Florence Jaumotte, 2008. "Rising Income Inequality; Technology, o+L3904r Trade and Financial Globalization?," IMF Working Papers 08/185, International Monetary Fund.
- Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2004.
"FDI and economic growth: the role of local financial markets,"
Journal of International Economics,
Elsevier, vol. 64(1), pages 89-112, October.
- Sebnem Kalemli-Ozcan & Laura Alfaro & Selin Sayek & Areendam Chanda, 2002. "FDI and Economic Growth: The Role of Local Financial Markets," Macroeconomics 0212007, EconWPA.
When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp1202. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)
If references are entirely missing, you can add them using this form.