FOREIGN DIRECT INVESTMENT - GROWTH NEXUS: A REVIEW ...

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International Journal of Applied Econometrics and Quantitative Studies Vol. 4-2 (2007)Choe (2003) 80countriesHermes and 67Lensink developing(2003) countriesOmran and 17 ArabBolbol (2003) countriesAlfaro (2003) 47countriesMencinger(2003)Alfaro et al.(2004)8 transitioncountriesDifferentsamples 71countriesNath (2004) 10transitioneconomiesof CEEHansen andRand (2004)Basu andGuariglia(2005)31developingcountries119countriesNath (2005) 13economiesof CEEand CEEB1971-951970-951975-991981-991994-20011975-951990-20001970-20001970-991990-200390number of cases the direction ofcausation actually runs fromgrowth to FDIPositive but weakPositive for 37 countries (LatinAmerica and Asia region), for allothers no effectPositiveFDI exerts an ambiguous effect ongrowth. FDI in the primary sector,however, tend to have a negativeeffect on growth, while investmentin manufacturing a positive one.Evidence from the service sector isambiguous.Robust negative causalrelationship between FDI andgrowthPositivePositivePositivePositiveIn the presence of trade, FDI doesnot have any significiant effect ongrowthKang and Du 20 OECD 1981- No significiant effect(2005) countries 2000Chowdhury Chile, 1969- GDP causes FDI in Chile and not
Ozturk, I. Foreign Direct Investment-Growth Nexus: A Review of Literatureand Mavrotas(2005)Li and Liu(2005)Busse andGroizard(2005)Darrat et al.(2005)Bacic et al.(2005)Karbasi et al.(2005)Lensink andMorrissey(2006)Malaysia,Thailand84countries82countries6 MENAand 17CEEcountries11transitioneconomies42countries87countries2000 vice versa. There is a bidirectionalcausality between GDPand FDI in Malaysia and Thailand1970- Positive991975-20031979-20021994-20021971-20001975-97Effect depends on regulations andinstitutional frameworkThe effect of FDI inflow oneconomic growth is generallynegative or statisticalyinsignificiant in MENA and non-EU accession CEE countries.However, it is positive in the caseof EU accession countries of theCEE region.Insignificiant and mixed resultsPositive effect. The contribution ofFDI on economic growth isenhanced by its positive interactionwith human capital and soundmacroeconomic policies andinstitutional stability.Positive4. ConclusıonThis paper provides an extensive survey of the literature on FDI andGrowth, examining both the theory that underlies the work in thisarea and the results of empirical studies published since 1986.Overall, a larger number of studies appear to favour the conventionalassumption that FDI has positive effect on growth. The consensushas been reached among academia and practitioners that FDI tendsto have significant effect on economic growth through multiplechannels such as capital formation, technology transfer and spillover,human capital (knowledge and skill) enhancement, and so on.91
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FOREIGN DIRECT INVESTMENT - GROWTH NEXUS: A REVIEW ...

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