Working Paper: NBER ID: w10378
Authors: Bruce A. Blonigen; Miao Wang
Abstract: This paper examines the question of whether less-developed countries' (LDCs') experiences with foreign direct investment (FDI) systematically different from those of developed countries (DCs). We do this by examining three types of empirical FDI studies that typically do not distinguish between LDCs and DCs in their analysis. First, we find that the underlying factors that determine the location of FDI activity across countries vary systematically across LDCs and DCs in a way that is not captured by current empirical models of FDI. Second, the effect of FDI on economic growth is one that is only supported for LDCs in the aggregate data, not DCs. Third, the evidence suggests that FDI is much less likely to crowd out (more likely to crowd in) domestic investment for LDCs than DCs.
Keywords: No keywords provided
JEL Codes: F2; H2; O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Factors determining FDI location (F23) | Economic growth is affected by FDI differently in LDCs and DCs (O19) |
| FDI (F23) | Economic growth in LDCs (O10) |
| FDI (F23) | Economic growth in DCs (O10) |
| FDI (F23) | Domestic investment in LDCs (F21) |
| FDI (F23) | Domestic investment in DCs (F21) |