Foreign Capital and Domestic Productivity in Developing Countries: An Empirical Analysis

Abstract

Foreign direct investment Total factor productivity Human capital Institutional quality Developing countries GMM estimation. Foreign direct investment (FDI) has originally been regarded as the navigating force of economic activities and economic growth (EG) worldwide, especially in developing countries. The influence of FDI growth on EG involves the absorptive capacities of developing nations. The benefits of FDI can be maximized by enhanced technology transfers and productivity spillover. In this context, the motivation to conduct the current study was to investigate the impact of FDI on the TFP of developing countries, along with the control variables of human capital (HC) and the political institutional (PI) index. As the current study has been conducted in the context of developing countries, the researcher has collected data from world developing indicator (WDI) including Cambodia,

Impact of Domestic and Foreign Capital on Economic Growth and Employment: Empirical Analysis of 43 Lower Middle-income Economies

“…This shows that there is positive impact of foreign capital inflows on economic growth, explaining that higher the volume of foreign capital inflows higher would be the economic growth and viceversa. This finding is also in line with the previously explanation on FDI and economic development (Adam, 2020;and Johnson, 2006). Likewise, coefficient of Region is positive and significant with GDPPCG which indicates that the South Asian economic has more dynamic and volatile in comparison to other economic regions.…”