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FDI, investment and growth in OECD countries

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Abstract

Multinational corporations [MNCs] usually engage in foreign direct investment [FDI] to take cost advantages of producing abroad to negate the need for licensing or subsidiary production. At the macro level, FDI accounts for significant proportions of MNCs total investment and has discernible impacts on economic growth. This is shown theoretically in the growth model where FDI complements domestic capital. Our model predictions tested favourably against panel data analysis of FDI on growth for thirty OECD countries from 1990 to 2004. This paper also contributes to integrating micro and macro aspects of the impact of FDI on economic growth and provides empirical support to existing literature.

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  • Bhattarai, Keshab R & Ghatak, Subrata, 2010. "FDI, investment and growth in OECD countries," Economics Discussion Papers 2010-5, School of Economics, Kingston University London.
    • Handle: RePEc:ris:kngedp:2010_005
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    File URL: http://eprints.kingston.ac.uk/16240/
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    Cited by:

    1. Melisa Chanegriha & Chris Stewart & Christopher Tsoukis, 2017. "Identifying the robust economic, geographical and political determinants of FDI: an Extreme Bounds Analysis," Empirical Economics, Springer, vol. 52(2), pages 759-776, March.
    2. Bogdan Dima & Stefana Maria Dima & Oana-Ramona Lobont, 2013. "New empirical evidence of the linkages between governance and economic output in the European Union," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 16(1), pages 68-89, March.

    More about this item

    Keywords

    FDI; Economic Growth; OECD;
    All these keywords.

    JEL classification:

    • 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
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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