Abstract

http://ssrn.com/abstract=425260
 
 

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Foreign Direct Investment and Economic Growth in Developing Countries: How Relevant Are Host-Country and Industry Characteristics?


Peter Nunnenkamp


University of Kiel

Julius Spatz


Independent

July 2003

Kiel Working Paper No. 1176

Abstract:     
Conclusive evidence supporting the widely held view that developing countries should draw on foreign direct investment (FDI) to spur economic development is surprisingly hard to come by. We raise the proposition that results on the growth impact of FDI are ambiguous because highly aggregated FDI data, used in virtually all previous empirical studies, blur the differences between resource-seeking, market-seeking and efficiency-seeking FDI and ignore the compatibility of different types of FDI with economic conditions prevailing in the host country. Analysing US FDI stocks in major sectors and specific manufacturing industries in a large number of developing countries, we show that positive growth effects of FDI are anything but guaranteed. Rather, host-country and industry characteristics as well as the interplay between both sets of characteristics have an important say on the growth impact of FDI in developing countries.

Number of Pages in PDF File: 48

Keywords: foreign direct investment stocks, resource-seeking, market-seeking and efficiency-seeking FDI, host-country characteristics, industry characteristics, economic growth effects

JEL Classification: F21

working papers series


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Date posted: August 27, 2003  

Suggested Citation

Nunnenkamp, Peter and Spatz, Julius, Foreign Direct Investment and Economic Growth in Developing Countries: How Relevant Are Host-Country and Industry Characteristics? (July 2003). Kiel Working Paper No. 1176. Available at SSRN: http://ssrn.com/abstract=425260 or http://dx.doi.org/10.2139/ssrn.425260

Contact Information

Peter Nunnenkamp
University of Kiel ( email )
D-24100 Kiel
Germany
Julius Spatz (Contact Author)
Independent
No Address Available
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