Financial-Sector Foreign Direct Investment and Host Countries: New and Old Lessons

27 Pages Posted: 28 Sep 2004

See all articles by Linda S. Goldberg

Linda S. Goldberg

Federal Reserve Bank of New York; National Bureau of Economic Research (NBER)

Date Written: April 2004

Abstract

Many of the lessons from foreign direct investment (FDI) research on manufacturing and extractive resource industries are applicable to FDI research on the financial sector. This paper summarizes the main findings and policy themes of FDI research, with a primary focus on the implications of FDI for host countries, especially emerging market economies. I review evidence of technology transfers, productivity spillovers, wage effects, macroeconomic growth, and fiscal and tax concerns. Throughout this paper, I stress that parallel findings often arise from studies of general FDI and studies of financial-sector FDI. I also emphasize important differences between the effects of FDI in these sectors, especially with regard to local institution building and business cycles. These differences - more so than the similarities - should be the focus of research efforts.

Keywords: foreign direct investment, bank, emerging market, host country, financial, capital flows

JEL Classification: F3, F4

Suggested Citation

Goldberg, Linda S., Financial-Sector Foreign Direct Investment and Host Countries: New and Old Lessons (April 2004). FRB of New York Staff Report No. 183. Available at SSRN: https://ssrn.com/abstract=596589 or http://dx.doi.org/10.2139/ssrn.596589

Linda S. Goldberg (Contact Author)

Federal Reserve Bank of New York ( email )

33 Liberty Street
New York, NY 10045
United States
212-720-2836 (Phone)
212-720-6831 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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