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The Effects of FDI Inflows on Host Country Economic Growth

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  • Johnson, Andreas

    () (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

Abstract

This paper discusses and models the potential of FDI inflows to affect host country economic growth. The paper argues that FDI should have a positive effect on economic growth as a result of technology spillovers and physical capital inflows. Performing both cross-section and panel data analysis on a dataset covering 90 countries during the period 1980 to 2002, the empirical part of the paper finds indications that FDI inflows enhance economic growth in developing economies but not in developed economies.

Suggested Citation

  • Johnson, Andreas, 2006. "The Effects of FDI Inflows on Host Country Economic Growth," Working Paper Series in Economics and Institutions of Innovation 58, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  • Handle: RePEc:hhs:cesisp:0058
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    References listed on IDEAS

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    Cited by:

    1. Mite Miteski & Dijana Janevska Stefanova, 2017. "The Impact of Sectorial FDI on Economic Growth in Central, Eastern and Southeastern Europe," Working Papers 2017-01, National Bank of the Republic of Macedonia.
    2. Eldin Mehic & Sabina Silajdzic & Vesna Babic-Hodovic, 2013. "The Impact of FDI on Economic Growth: Some Evidence from Southeast Europe," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(S1), pages 5-20, January.
    3. Nuno Carlos LEITÃO, 2013. "A Panel Data Modelling Of Agglomeration And Growth: Cross-Country Evidence," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 8(1), pages 67-77, February.
    4. Yang, Boqiong & Brosig, Stephan & Chen, Jianguo, 2013. "Environmental Impact of Foreign vs. Domestic Capital Investment in China," EconStor Open Access Articles, ZBW - German National Library of Economics, pages 245-271.
    5. Pareja-Alcaraz, Pablo, 2017. "Chinese investments in Southern Europe's energy sectors: Similarities and divergences in China's strategies in Greece, Italy, Portugal and Spain," Energy Policy, Elsevier, vol. 101(C), pages 700-710.
    6. Ioannis Katsikis & Garyfallos Fragidis & Dimitrios Paschaloudis, 2012. "International and Cross Border Entrepreneurship: The Case of Greece and Bulgaria," ERSA conference papers ersa12p779, European Regional Science Association.
    7. Burcu Türkcan & Alper Duman & I. Hakan Yetkiner, 2008. "How Does FDI and Economic Growth Affect Each Other? The OECD Case," Papers of the Annual IUE-SUNY Cortland Conference in Economics,in: Proceedings of the Conference on Emerging Economic Issues in a Globalizing World, pages 21-40 Izmir University of Economics.
    8. Sara Amoroso & Bettina Mueller, 2017. "The short-run effects of Knowledge intensive greenfield FDI on new domestic entry," JRC Working Papers on Corporate R&D and Innovation 2017-02, Joint Research Centre (Seville site).
    9. Eldin Mehic & Sabina Silajdzic & Vesna Babic-Hodovic, 2013. "The Impact of FDI on Economic Growth: Some Evidence from Southeast Europe," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 49(S1), pages 5-20, January.
    10. repec:eco:journ1:2017-03-62 is not listed on IDEAS
    11. Fiaz Hussain & Shahzad Hussain & Naila Erum, 2015. "Are Defense Expenditures Pro Poor or Anti Poor in Pakistan? An Empirical Investigation," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 54(4), pages 875-894.
    12. Shujing Yue & Yang Yang & Yaoyu Hu, 2016. "Does Foreign Direct Investment Affect Green Growth? Evidence from China’s Experience," Sustainability, MDPI, Open Access Journal, vol. 8(2), pages 1-14, February.
    13. Yang, Boqiong & Chen, Jianguo, 2011. "An empirical model of the environmental effect of FDI in host countries: Analysis based on Chinese panel data," IAMO Forum 2011: Will the "BRICs Decade" Continue? – Prospects for Trade and Growth 3, Leibniz Institute of Agricultural Development in Central and Eastern Europe (IAMO).
    14. Gammoudi, Mouna & Cherif, Mondher & Asongu, Simplice A, 2016. "FDI and Growth in the MENA countries: Are the GCC countries Different?," MPRA Paper 74227, University Library of Munich, Germany.
    15. Carike Claassen & Elsabé Loots & Henri Bezuidenhout, 2011. "Chinese Foreign Direct Investment in Africa," Working Papers 261, Economic Research Southern Africa.
    16. repec:gam:jsusta:v:8:y:2016:i:2:p:158:d:63890 is not listed on IDEAS
    17. Burcu Turkcan & I. Hakan Yetkiner, 2010. "Endogenous determination of FDI growth and economic growth: the OECD case," International Journal of Public Policy, Inderscience Enterprises Ltd, vol. 5(4), pages 409-429.
    18. Lenuta CARP, 2012. "Analysis Of The Relationship Between Foreign Direct Investments And Economic Growth – Case Of Romania," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 9, pages 175-188, June.
    19. Imola Drigă, 2011. "FDI Flows and Host Country Economic Development," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(4), pages 101-108.
    20. Olawumi Dele Awolusi, 2012. "Forecasting international technology transfer and international trade in Nigeria: a time series analysis," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, vol. 2(3), pages 282-297.
    21. repec:bla:rdevec:v:21:y:2017:i:3:p:527-542 is not listed on IDEAS
    22. Sucharita Ghosh & Francesco Renna, 2015. "The Relationship Between Communicable Diseases and FDI Flows: An Empirical Investigation," The World Economy, Wiley Blackwell, vol. 38(10), pages 1574-1593, October.

    More about this item

    Keywords

    foreign direct investment; economic growth; developing economies; developed economies;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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