How Does Foreign Direct Investment Really Affect Developing Countries' Growth?

Abstract

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Governance, Regulations, Trade Openness and FDI Inflows: Empirical Study

“…12; impact for example on an underdeveloped or still developing country would be expected larger when more FDI is invested and capitalized in the country, whereas it is not expected to add much for already developed country when compared to the former. Herzer (2012) argues that the effect of FDI varies across countries, and that this variation is mainly explained by cross -country differences in freedom from government intervention, business freedom, and export dependence (Herzer, 2012). Therefore, it is obviously arguable whether FDI inflows is the same across countries.…”

Surges and stops in greenfield and M&A FDI flows to developing countries: analysis by mode of entry

“…As shown in Albuquerque (2003), the share of FDI in total foreign equity flows is larger for developing countries than for developed countries, an empirical regularity explained by Goldstein and Razin (2006) with the high production costs in developed economies which imply that it is more beneficial to incur the fixed costs associated with FDI in developing countries than in developed ones. As FDI flows have become an important and often dominant source of finance in developing countries, concerns have grown that economic growth and macroeconomic stability might be harmed in countries exposed to extreme fluctuations of these flows (Lensink and Morrissey 2006;Herzer 2012).…”

Signalling Demand for Foreign Investment: Postsocialist Countries in the Global Bilateral Investment Treaties Network

“…Moreover, much research in the sociology of development, adopting world-systems and dependency theoretical lenses points to negative consequences of foreign investment (Dixon & Boswell 1996;Kentor 1998Kentor , 2001de Soysa & Oneal 1999;Alderson & Nielsen 2002;Beer & Boswell 2002;Alderson 2004;Mahutga & Bandelj 2008). Further, recent studies on the link between FDI and growth have actually found a negative relationship (Herzer 2012;Curwin & Mahutga 2014). All this considered, neoliberalism that promotes FDI as a growth strategy is treated here not as based on objective economic relationships but as a policy paradigm that is constructed as more or less legitimate by states that embrace the Washington Consensus (Fourcade & Babb 2002;Mudge 2008).…”

“…874 investors to participate by bidding in contests for the purchase of state owned enterprises involving both domestic and foreign actors. This resulted in foreign-led economies (Bohle & Greskovits 2007, 2012Drahokoupil 2008b).…”

“…Scholars have tried to understand these economic transformations, and the role of the states, domestic elites and firms in this process (Amsden et al 1994;Campbell & Pedersen 1996;Rona-Tas 1997;Stark & Bruszt 1998;Eyal et al 1998;Hanley et al 2002;Ekiert & Hanson 2003). They have also examined the intersection of globalisation and postsocialist transformation, in particular the role of a neoliberal policy agenda on various kinds of market reforms (Bockman & Eyal 2002;Orenstein 2005Orenstein , 2009Bohle & Greskovits 2007, 2012, and the determinants and consequences of foreign investment in the region (King & Varadi 2002;Jensen 2006;Cass 2007;Bandelj 2008b;Drahokoupil 2008a;Bandelj & Mahutga 2010). We contribute to this literature by investigating unique data on the complete worldwide network of bilateral investment treaties (BITs) since its inception in the period from 1959 to 2009, which provides the institutional framework for material flows of foreign direct investment (FDI).…”