FDI and economic growth: the role of local financial markets

Alfaro, Laura; Chanda, Areendam; Kalemli‐Özcan, Ṣebnem; Sayek, Selin

doi:10.1016/s0022-1996(03)00081-3

Cited by 1,705 publications

(861 citation statements)

References 26 publications

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“…They estimated that a 1 per cent increase in the FDI to GDP ratio is associated with a 0.42 per cent increase in economic output. Alfaro et al (2004) also found a positive relationship between foreign investment and growth and provide a per capita estimate of the value of these benefits. Based on analysis of a sample of 50 countries during the period 1980-1995, they found that an increase of 1 per cent in the FDI to GDP ratio is associated with an increase of 2.75 in the real per capita constant dollars, while countries with developed financial markets get an additional 2.51 constant-dollar increase in per capita GDP.…”

Section: Evidence From Cross-country Studiesmentioning

confidence: 79%

“…To estimate the effects of changes in FDI on UK GDP, similarly to Dhingra, Ottaviano et al (2016b) we draw on estimates from Alfaro et al (2004), who estimate the effect of changes in FDI flows on growth rates across countries, in order to predict how changes in FDI affect growth. Alfaro et al (2004) found that increases in FDI inflows have a positive effect on GDP growth, especially for countries with a relatively large and developed financial sector, such as the UK.…”

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confidence: 99%

“…Alfaro et al (2004) found that increases in FDI inflows have a positive effect on GDP growth, especially for countries with a relatively large and developed financial sector, such as the UK. Using the estimates from Table F.1 in Appendix F (column 1) and Alfaro et al (2014), we predict changes in GDP and GDP per capita under different post-Brexit scenarios (see Appendix F for more details on the calculations).…”

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confidence: 99%

“…The effect of FDI on GDP Alfaro et al (2004) estimated the effect of FDI on economic growth and allowed the impact of FDI on GDP growth per capita to vary with the level of domestic financial markets. They found that countries with more-developed financial markets benefit relatively more from FDI than those countries with less-developed financial systems.…”

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confidence: 99%

“…They found that countries with more-developed financial markets benefit relatively more from FDI than those countries with less-developed financial systems. Similarly to Dhingra, Ottaviano et al (2016b), we use our parameter estimates presented in Table F.1 and the parameter estimates from Table 7 (column 1) of Alfaro et al (2004) to predict future changes in UK GDP under different Brexit scenarios. Alfaro et al's (2004) estimates are based on a regression of average growth on the share of FDI among GDP, the interaction with financial market development and other control variables including initial GDP, financial market development, population growth, schooling, government consumption and a dummy for Sub-Saharan Africa, trade volumes and inflation.…”

mentioning

confidence: 99%

See 4 more Smart Citations

After Brexit: Alternate forms of Brexit and their implications for the United Kingdom, the European Union and the United States

Ries¹,

Hafner²,

Smith³

et al. 2017

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For more information on this publication, visit www.rand.org/t/RR2200Published by the RAND Corporation, Santa Monica, Calif., and Cambridge, UK © Copyright 2017 RAND CorporationR® is a registered trademark.RAND Europe is a not-for-profit research organisation that helps to improve policy and decision making through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors. Limited Print and Electronic Distribution RightsThis document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited. Permission is given to duplicate this document for personal use only, as long as it is unaltered and complete. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial use. For information on reprint and linking permissions, please visit www.rand.org/pubs/permissions. Support RANDMake a tax-deductible charitable contribution at www.rand.org/giving/contribute www.rand.org www.randeurope.org i In a referendum on 23 June 2016, the British public voted to begin a process of withdrawing from the European Union. Since World War II, no developed country has decided to leave such a major international institution without a military defeat or political revolution. The Brexit negotiations are therefore likely to bring great uncertainty to both the UK and the EU.This study examines the processes and issues involved in the Brexit negotiations, and explores the implications of possible outcomes for the UK, the European Union and the United States. It draws upon formal negotiating positions and mandates adopted, but with the expectation that a wider array of concerns will come into play as the process develops. The study uses game theory insights to explore and create a better understanding of how a wide variety of factors might affect the outcome of the negotiations. The use of modelling and game theory modes of analysis illuminates the broader issues at play, at some remove from the day-to-day drama of the UK's negotiations with the European Union.We also model the potential economic implications of various options for a post-Brexit relationship between the UK and EU. Specifically, the study examines the economic effect of five 'hard Brexit' options: an arrangement in which UK trade is governed by WTO rules, including the application of most-favoured-nation tariffs; the successful negotiation of a UK-EU free trade agreement (FTA); the creation of a UK-EU-US FTA based on the proposed Transatlantic Trade and Investment Partnership; the creation of a US-UK FTA excluding the EU; and an extended transition period during which EU and UK tariffs do not change but other non-tariff barriers to trade come into effect. In addition, we examine three 'soft Brexit' scenarios: the Norwegian model (membership of the European Economic Area), the Swiss model (a series of bilateral agree...

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Section: Evidence From Cross-country Studiesmentioning

confidence: 79%

mentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

mentioning

confidence: 99%

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After Brexit: Alternate forms of Brexit and their implications for the United Kingdom, the European Union and the United States

Ries¹,

Hafner²,

Smith³

et al. 2017

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Are Sovereign Defaulters Punished?: Evidence from Foreign Direct Investment Flows

Fuentès

Saravia

Kolb³

2011

Sovereign Debt

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Food retail expansion patterns in Sub‐Saharan Africa and the Middle East and North Africa: Institutional and regional perspectives

Bahn

Abebe

2019

Agribusiness

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Food retail transformation in developing countries continues to receive attention due to its implications for business expansion and food system development. We assess the dynamism of supermarketization in two relatively understudied regions—Sub‐Saharan Africa and the Middle East and North Africa—applying the institution‐based view and econometric analysis of a pooled cross‐sectional dataset of over 700 country‐year observations. While modern food retail has shown rapid growth, the traditional food retail segment is still dominant in both regions. The observed food retail patterns may be attributed to economic factors (income levels), sociodemographic (female labor force participation, urbanization, and religion), and institutional factors (control of corruption, ease of starting a business, time to enforce a contract, and World Trade Organization membership). However, while economic and sociodemographic variables exhibit similar effects in both regions, results are mixed regarding the institutional factors; potential explanations are suggested [EconLit citations: O100, L100].

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FDI and economic growth: the role of local financial markets

Cited by 1,705 publications

References 26 publications

After Brexit: Alternate forms of Brexit and their implications for the United Kingdom, the European Union and the United States

After Brexit: Alternate forms of Brexit and their implications for the United Kingdom, the European Union and the United States

Are Sovereign Defaulters Punished?: Evidence from Foreign Direct Investment Flows

Food retail expansion patterns in Sub‐Saharan Africa and the Middle East and North Africa: Institutional and regional perspectives

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