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Does Foreign Direct Investment Promote Growth? Panel Data and Time Series Evidence from Less Developed Countries, 1970-2002

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  • Sarkar, Prabirjit

Abstract

The present study casts some doubt on the growth-promoting effect of foreign direct investment (FDI), which is widely supported by the proponents of financial globalization. The panel data analysis of 51 less developed countries shows a rising relationship between growth and FDI (relative to gross capital formation) only for the group of 11 relatively rich and open-economy countries. The time-series analysis observes meaningful positive relationships between FDI and growth only for 3 countries belonging to this group and some other countries. But by and large no long-term positive relationship exists between the two irrespective of income levels, openness and FDI-dependence.

Suggested Citation

  • Sarkar, Prabirjit, 2007. "Does Foreign Direct Investment Promote Growth? Panel Data and Time Series Evidence from Less Developed Countries, 1970-2002," MPRA Paper 5176, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:5176
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    File URL: https://mpra.ub.uni-muenchen.de/5176/1/MPRA_paper_5176.pdf
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    1. repec:jfr:ijfr11:v:8:y:2017:i:4:p:228-239 is not listed on IDEAS

    More about this item

    Keywords

    Foreign Direct Investment; Financial Globalization; Liberalization;

    JEL classification:

    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F50 - International Economics - - International Relations, National Security, and International Political Economy - - - General
    • F02 - International Economics - - General - - - International Economic Order and Integration
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O50 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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