Foreign direct investment in developing countries and growth: A selective survey

Mello, Luiz R. de

doi:10.1080/00220389708422501

Cited by 943 publications

(533 citation statements)

References 55 publications

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“…On the other hand at macro level FDI has a positive contribution and lead to high economic growth Zhao and Zhang (2010), and to a higher level of positive output externalities (Wang, 2010). As we have explained in the introduction in new classical model FDI encourages growth by enhancing the capacity of total investment and on the other hand in the case of endogenous growth theory FDI encourages growth via transferring technology and generating knowledge spillover via foreign to targeted host country, which means the host country receive knowledge skills, inputs, knowledge about technology from developed countries (Balasubramanyam et al, 1996;Jr., 1997). Moreover FDI creates sources of jobs (Lipsey, Sjöholm, & Sun, 2013;Waldkirch, Nunnenkamp, & Bremont, 2009).…”

Section: Review Of Literaturementioning

confidence: 99%

“…It happens when the local firm learns the technology and improves its knowledge by watching the technology used by the foreign firm. The existence of the foreign firm, this situation creates the atmosphere of competition, the other thing is that this that the local country's labor lean many things and technology by the foreign firm and it enhance their skills and the last channel is that by foreign firms it enhance the linkages from local to international market (De Mello & R, 1999;Jr., 1997;Wang & Blomström, 1992). Spillover effects are also caused by the FDI through these spillovers transferring of knowledge can be occurred.…”

Section: Introductionmentioning

confidence: 99%

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Does Foreign Direct Investment Lead to Economic Growth? Evidences from Asian Developing Countries

Ali¹,

Mingque²

2018

IJEF

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The study about the interrelationship between FDI and economic growth in the host country is one of the hottest discussions. Some of the studies have evidence and consider FDI as the growth driver and some others don't. This study attempted to scrutinize the causal association of FDI with GDP in Indonesia, India, Malaysia and Bangladesh for the years of 1990 to 2014. Cointegration test has been applied in this study which shows that there is a long-term interrelationship within FDI and economic growth and then applied the Granger causality (GC) test which is based on the VECM. The short run results show that there are no evidence of causality direction from FDI to GDP and vice versa, whereas the long run results show that there is a positive impact of FDI and other variables to the GDP but not significant, and from GDP and other variables to FDI there is a negative interrelationship but significant. The results show the ambiguous interrelationship between FDI and economic growth.

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Section: Review Of Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Does Foreign Direct Investment Lead to Economic Growth? Evidences from Asian Developing Countries

Ali¹,

Mingque²

2018

IJEF

View full text Add to dashboard Cite

show abstract

“…Based on endogenous growth models, FDI can enhance growth by encouraging the incorporation of new inputs and technologies in the production function of the recipient economy (De Mello 1997). In the case of new inputs, output growth can result due to the use of a wider range of intermediate goods in FDI-related production.…”

Section: Policy Issuesmentioning

confidence: 99%

Industrial Deepening in Malaysia: Policy Lessons for Developing Countries

Siew-Yean

Loke

2011

SSRN Journal

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The Malaysian economy has undergone substantial industrial transformation, shifting from primary commodity production to manufacturing in slightly more than 5 decades since achieving independence. However, efforts to deepen manufacturing development have not succeeded in nurturing a critical mass of domestic entrepreneurs with indigenous innovative capacities as industrialization continues to be dependent on imported technology and capital. Instead, the manufacturing sector is facing premature deindustrialization. In view of these developments, this study aims to assess the extent of industrial deepening in a country through the development of linkages, as well as the key factors that have contributed to this. This has important policy lessons for other developing countries that are following similar export-oriented, foreign direct investment-led strategies for their industrial development. The main findings of this study indicate that while trade and investment policies have contributed to the development of the manufacturing sector, they have also fostered closer integration with the rest of the world rather than within the domestic economy. The electrical and electronics subsector has relatively weaker backward linkages than other subsectors in the economy. Deepening internal integration requires complementary labor, human capital, and technology policies that can facilitate the development of linkages in the manufacturing sector.

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“…Wong and Carranza (1999) noted that capital inflow worsens the CAB, both under flexible and fixed exchange rate, though through different routes. On the other hand the FDI-led growth model induced mainly by the 'Asian tigers' who mostly liberalized capital account as part of unilateral financial deregulation, buoyed by huge external surpluses (RBI, 2004), underline the importance of foreign investment in facilitating economic development (Borensztein, 1998;de Mello, 1997). Sengupta (2007) argued that KAC improves macroeconomic management, as higher degree of capital account openness generates lower inflation rates.…”

Section: Capital Controls: Theory and Evidencementioning

confidence: 99%

The Structural Relationship Between Current and Capital Account Balance in India: A Time Series Analysis

Chakraborty

Mukherjee²,

Sinha³

2010

SSRN Journal

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The long run relationship between current account balance (CAB) and capital account balance (KAB) and the repercussions of capital account convertibility (KAC) on growth process of a country is a much debated issue. In particular, in the aftermath of the Southeast Asian crisis, the limitation of the liberal capital regime for a developing country like India is often highlighted in the literature. However, the probable impact of introducing KAC on CAB in India generally is discussed theoretically. Though some of the existing studies in India have earlier focused on this research question, they have done so by exogenously assuming the existence of a single structural break in the interrelationship between CAB and KAB. The present study intends to bridge the gap in the literature by raising two empirical questions: first, how far KAC is likely to destabilize the CAB and second, measuring the strength of the interrelationship between CAB and KAB. The current paper also contributes to the literature by incorporating multiple endogenous structural breaks in the empirical analysis. The empirical findings do not support any long term relationship between capital and current account balance and reveals that two significant structural breaks are observed in 1993-94 and 2003-04.

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Foreign direct investment in developing countries and growth: A selective survey

Cited by 943 publications

References 55 publications

Does Foreign Direct Investment Lead to Economic Growth? Evidences from Asian Developing Countries

Does Foreign Direct Investment Lead to Economic Growth? Evidences from Asian Developing Countries

Industrial Deepening in Malaysia: Policy Lessons for Developing Countries

The Structural Relationship Between Current and Capital Account Balance in India: A Time Series Analysis

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