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Sectoral Analysis of Foreign Investment and Growth In the Developed Countries

Author

Listed:
  • Tam Bang Vu

    () (College of Business and Economics, University of Hawaii at Hilo)

  • Ilan Noy

    () (Department of Economics, University of Hawaii at Manoa)

Abstract

Empirical studies on FDI and growth in developed countries have yielded conflicting results using cross-country regressions. We use sectoral data for a group of six country members of the Organization for Economic Cooperation and Development. Our paper is the first to identify the sector-specific impact of FDI on growth in the developed countries. Our results show that FDI might have positive or negative effect on economic growth operating directly and through its interaction with labor. Moreover, we find the effects seem to be very different across countries and economic sectors.

Suggested Citation

  • Tam Bang Vu & Ilan Noy, 2007. "Sectoral Analysis of Foreign Investment and Growth In the Developed Countries," Working Papers 200725, University of Hawaii at Manoa, Department of Economics.
  • Handle: RePEc:hai:wpaper:200725
    as

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    File URL: http://www.economics.hawaii.edu/research/workingpapers/WP_07-25.pdf
    File Function: First version, 2007
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    References listed on IDEAS

    as
    1. Carlin, Wendy & Mayer, Colin, 2003. "Finance, investment, and growth," Journal of Financial Economics, Elsevier, vol. 69(1), pages 191-226, July.
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    3. 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.
    4. Hausman, Jerry, 2015. "Specification tests in econometrics," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 38(2), pages 112-134.
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    6. N. Gregory Mankiw & David Romer & David N. Weil, 1992. "A Contribution to the Empirics of Economic Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 407-437.
    7. Bruce A. Blonigen & Miao Wang, 2004. "Inappropriate Pooling of Wealthy and Poor Countries in Empirical FDI Studies," NBER Working Papers 10378, National Bureau of Economic Research, Inc.
    8. Balcao Reis, Ana, 2001. "On the welfare effects of foreign investment," Journal of International Economics, Elsevier, vol. 54(2), pages 411-427, August.
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    Cited by:

    1. Maryia Akulava & Ganna Vakhitova, 2010. "The Impact of FDI on Firm’s Performance Across Sectors: Evidence from Ukraine," BEROC Working Paper Series 10, Belarusian Economic Research and Outreach Center (BEROC).
    2. Manamba EPAPHRA, 2016. "Foreign Direct Investment and Sectoral Performance in Tanzania," Journal of Economics and Political Economy, KSP Journals, vol. 3(4), pages 670-719, December.

    More about this item

    Keywords

    Foreign direct investment; growth;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies

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