FDI and Growth: What Cross-Country Industry Data Say

Government of the Italian Republic (Italy), Ministry of Economy and Finance, Department of the Treasury Working Paper No. 10

39 Pages Posted: 12 Dec 2011 Last revised: 30 Jul 2012

See all articles by Maria Cipollina

Maria Cipollina

Università degli Studi del Molise

Giorgia Giovannetti

Università di Firenze

Filomena Pietrovito

University of Molise

Alberto F. Pozzolo

Università degli Studi di Roma Tre

Multiple version iconThere are 4 versions of this paper

Date Written: December 1, 2011

Abstract

The theoretical literature has discussed different channels through which foreign direct investments (FDI) promote host country’s economic growth, but empirical analyses have so far been inconclusive. In this paper we provide evidence that FDI have a positive and statistically significant growth effect in recipient countries, using a panel of 14 manufacturing sectors for (a sample of) developed and developing countries over the period 1992-2004. This effect is stronger in capital intensive and in technologically advanced sectors, and comes primarily from an increase in labor productivity, suggesting that FDI not only contribute to physical capital accumulation, but also generate positive technological spillovers. The policy implications of our findings are important, especially for developing countries, where the growth enhancing promotion of foreign investment in capital intensive and technologically advanced sectors is at the heart of the debate.

Keywords: foreign direct investment, economic growth, capital intensity, technological progress, patents, labor productivity

JEL Classification: F23, F36, F43, O16

Suggested Citation

Cipollina, Maria and Giovannetti, Giorgia and Pietrovito, Filomena and Pozzolo, Alberto F., FDI and Growth: What Cross-Country Industry Data Say (December 1, 2011). Government of the Italian Republic (Italy), Ministry of Economy and Finance, Department of the Treasury Working Paper No. 10, Available at SSRN: https://ssrn.com/abstract=1971172 or http://dx.doi.org/10.2139/ssrn.1971172

Maria Cipollina (Contact Author)

Università degli Studi del Molise ( email )

Via De Sanctis
I-86100 Campobasso, Campobasso (CB) 86100
Italy

Giorgia Giovannetti

Università di Firenze ( email )

Piazza di San Marco, 4
Florence, 50121
Italy

Filomena Pietrovito

University of Molise ( email )

Via F. de Sanctis s.n.c.
Campobasso, Campobasso (CB) 86100
Italy

Alberto F. Pozzolo

Università degli Studi di Roma Tre ( email )

Via Ostiense 163
Roma, RM 00154
Italy

HOME PAGE: http://www.uniroma3.it/

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