Determinants of, and the Relation Between, Foreign Direct Investment and Growth: A Summary of the Recent Literature
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
This paper summarizes recent arguments/findings on two aspects of foreign direct investment (FDI): its correlation with economic growth and its determinants. The first part focuses on recent literature regarding positive spillovers from FDI while the second deals with the determinants of FDI. The paper finds that while substantial support exists for positive spillovers from FDI, there is no consensus on causality. On determinants, the paper finds that market size, infrastructure quality, political/economic stability, and free trade zones are important for FDI, while results are mixed regarding the importance of fiscal incentives, the business/investment climate, labor costs, and openness.
Series:
Working Paper No. 2001/175
Subject:
Balance of payments Economic sectors Exports Financial sector policy and analysis Foreign corporations Foreign direct investment International trade Labor costs Spillovers Tax incentives Taxes
English
Publication Date:
November 1, 2001
ISBN/ISSN:
9781451858754/1018-5941
Stock No:
WPIEA1752001
Pages:
28
Please address any questions about this title to publications@imf.org