The Impact of Foreign Direct Investment on the Economic Growth of Developing Countries (2000-2010)
Economic Development, 2012, 2-3, 160-175
15 Pages Posted: 12 Oct 2011 Last revised: 11 Apr 2013
Date Written: October 10, 2011
Bearing in mind the strategic influence of Foreign Direct Investments (FDIs) on technological development, knowledge transfer, economic growth and productivity enrichment of host economies, the study analyses the impact of inward FDIs on the economic growth in developing nations. The research methodology is based on the use of deductive logic and a time-series analysis of quantitative data from official sources. A sample of developing nations makes its scope, while the period covers the past decade i.e. 2000-2010.
The findings indicate that inward FDIs are attracted to developing nations with higher availability of educated labour, higher government spending and more efficient quality of governance. The level of education has not been recognised as a strong influential factor unlike the past studies, implying that education is losing its overall value and becoming a cost (not an investment) for developing nations. The findings and conclusions are especially valuable for international organisations and governments, in the area of designing future policies and approaches for attracting and benefiting from the FDIs.
Keywords: Foreign Direct Investment (FDI), GDP, economic development, developing countries
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