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An Empirical Study of Foreign Direct Investment and Economic Growth in Developing Countries

외국인직접투자가 개발도상국의 경제성장에 미치는 영향

  • Received : 2014.01.20
  • Accepted : 2014.05.08
  • Published : 2014.05.31

Abstract

For the past decades, role of foreign direct investment has increased. Specially, East Asia and BRICs has experienced rapidly economic growth by FDI. Nevertheless, most of developing countries suffer from poverty. This paper empirically explores the impacts of FDI on economic output using a cross-country analysis based on data from 88 developing countries for the years 1990-2011. To this end, FDI is explicitly included in production function as production factor. Cross-country regression of income level is estimated with the country's human development, population growth, physical accumulation, and FDI as explanatory variables. Main finding of this paper is that FDI has a positive and significant impact on economic growth.

Keywords

foreign direct investment;economic output;cross-country analysis

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