IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Post-Manichean Economics: Foreign Investment, State Capacity and Economic Development in Transition Economies

  • Patrick Hamm
  • Lawrence King
Registered author(s):

    This paper evaluates the role of foreign direct investment (FDI) in the transition from socialism to capitalism. Fixed-effects panel regressions indicate that FDI and domestic investment have an equal effect on growth in the first year of investment, but over time FDI is associated with greater growth than domestic investment. However, this positive impact of FDI turns out to be contingent upon the presence of a relatively well-functioning state in the host economy; in the absence of such a state, the net effect of FDI on economic development may be negative. All findings are robust in light of instrumental variable estimation, which is used to account for potential endogeneity problems.

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

    File URL: http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_201-250/WP227.pdf
    Download Restriction: no

    Paper provided by Political Economy Research Institute, University of Massachusetts at Amherst in its series Working Papers with number wp227.

    as
    in new window

    Length:
    Date of creation: 2010
    Date of revision:
    Handle: RePEc:uma:periwp:wp227
    Contact details of provider: Postal: 418 N Pleasant St, Amherst MA 01002
    Phone: (413) 545-6355
    Fax: (413) 545-2921
    Web page: http://www.peri.umass.edu/
    Email:


    More information through EDIRC

    References listed on IDEAS
    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.:

    as in new window
    1. Joshua Angrist & Alan Krueger, 2001. "Instrumental Variables and the Search for Identification: From Supply and Demand to Natural Experiments," Working Papers 834, Princeton University, Department of Economics, Industrial Relations Section..
    2. John King, 2011. "Foreign Direct Investment and Pollution Havens," Journal of Economics and Econometrics, Economics and Econometrics Society, vol. 54(1), pages 39-47.
    3. Vladimir Popov, 2001. "Reform Strategies and Economic Performance: The Russian Far East as Compared to Other Regions," Comparative Economic Studies, Palgrave Macmillan, vol. 43(4), pages 33-66, December.
    4. Robert J. Barro, 2013. "Inflation and Economic Growth," Annals of Economics and Finance, Society for AEF, vol. 14(1), pages 121-144, May.
    5. Dutt, Amitava Krishna, 1997. "The pattern of direct foreign investment and economic growth," World Development, Elsevier, vol. 25(11), pages 1925-1936, November.
    6. William Easterly & Ross Levine & David Roodman, 2003. "New Data, New doubts: A Comment on Burnside and Dollar's "Aid, Policies, and Growth" (2000)," NBER Working Papers 9846, National Bureau of Economic Research, Inc.
    7. Baltagi, Badi H. & Wu, Ping X., 1999. "Unequally Spaced Panel Data Regressions With Ar(1) Disturbances," Econometric Theory, Cambridge University Press, vol. 15(06), pages 814-823, December.
    8. David E. Bloom & Jeffrey G. Williamson, 1997. "Demographic Transitions and Economic Miracles in Emerging Asia," NBER Working Papers 6268, National Bureau of Economic Research, Inc.
    9. Hein, Simeon, 1992. "Trade Strategy and the Dependency Hypothesis: A Comparison of Policy, Foreign Investment, and Economic Growth in Latin America and East Asia," Economic Development and Cultural Change, University of Chicago Press, vol. 40(3), pages 495-521, April.
    10. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
    11. J. A. Hausman, 1976. "Specification Tests in Econometrics," Working papers 185, Massachusetts Institute of Technology (MIT), Department of Economics.
    12. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    13. Tain-jy Chen & Yi-Ping Chen, 1995. "Foreign Direct Investment," Industry and Innovation, Taylor & Francis Journals, vol. 2(1), pages 57-68.
    14. William Easterly, 2003. "Can Foreign Aid Buy Growth?," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 23-48, Summer.
    15. Mann, Catherine L, 1991. "Industry Restructuring in East-Central Europe: The Challenge and the Role for Foreign Investment," American Economic Review, American Economic Association, vol. 81(2), pages 181-84, May.
    16. Bornschier, Volker, 1980. "Multinational corporations and economic growth : A cross-national test of the decapitalization thesis," Journal of Development Economics, Elsevier, vol. 7(2), pages 191-210, April.
    17. Green, Donald P. & Kim, Soo Yeon & Yoon, David H., 2001. "Dirty Pool," International Organization, Cambridge University Press, vol. 55(02), pages 441-468, March.
    18. Swan, Trevor W, 2002. "Economic Growth," The Economic Record, The Economic Society of Australia, vol. 78(243), pages 375-80, December.
    19. Dolan, Michael B. & Tomlin, Brian W., 1980. "First World-Third World linkages: external relations and economic development," International Organization, Cambridge University Press, vol. 34(01), pages 41-63, December.
    Full references (including those not matched with items on IDEAS)

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:uma:periwp:wp227. 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: (Judy Fogg)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.