Title: Foreign direct investment and economic growth: some evidence from across the world

Authors: Anita Ghatak, Ferda Halicioglu

Addresses: [Deceased] ' Department of Economics, Yeditepe University, 34755, Istanbul, Turkey

Abstract: This study is concerned with Foreign Direct Investment (FDI) and economic growth across the world for the period 1991–2001. This article produces fresh empirical evidence on the relation between FDI and economic growth obtained from single-equation and simultaneous-equation estimates for 140 countries using macroeconomic variables. The results indicate that a positive and statistically significant estimate of coefficient of FDI is obtained from single-equation ordinary least squares method for real per capita GDP regressions in all but one case. There exists a positive and statistically significant relation between the real per capita GDP and FDI in the case of many countries but correlation coefficient between exports-GDP ratio and percentage FDI is found to be insignificant. Country risk rating and the telecommunications variables are significant in all the relevant regressions and correlation estimates.

Keywords: foreign direct investment; FDI; multinational corporations; MNCs; composite risk rating; instrumental variable method; omitted variable method; simultaneous equation method; economic growth; per capita GDP; exports; country risk rating; telecommunications variables.

DOI: 10.1504/GBER.2007.015101

Global Business and Economics Review, 2007 Vol.9 No.4, pp.381 - 394

Published online: 13 Sep 2007 *

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