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FDI Flows and Host Country Economic Development

Author

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  • Imola Drigă

    (University of Petrosani, Romania)

Abstract

The propose of the paper is to analyze the relation between economic development and FDI flows. FDI should have a positive effect on economic growth as a result of positive externalities generated for host countries by multinational companies (MNCs). There are several studies on this issue, some of them pointing out that FDI has a considerable positive effect on host country economic growth but the magnitude depends on host country conditions, while other works indicate that there is no powerful interdependence between inward FDI to host country economic growth. However, it is generally accepted that there is a functional link between the degree of openness of trade and foreign direct investment, especially in developing countries.

Suggested Citation

  • Imola Drigă, 2011. "FDI Flows and Host Country Economic Development," Annals of the University of Petrosani, Economics, University of Petrosani, Romania, vol. 11(4), pages 101-108.
    • Handle: RePEc:pet:annals:v:11:y:2011:i:4:p:101-108
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    File URL: http://upet.ro/annals/economics/pdf/2011/part4/Driga.pdf
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    References listed on IDEAS

    as
    1. Martin Bijsterbosch & Marcin Kolasa, 2010. "FDI and productivity convergence in Central and Eastern Europe: an industry-level investigation," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(4), pages 689-712, January.
    2. Johnson, Andreas, 2006. "The Effects of FDI Inflows on Host Country Economic Growth," Working Paper Series in Economics and Institutions of Innovation 58, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    3. repec:aer:wpaper:165 is not listed on IDEAS
    4. Alfaro, Laura & Chanda, Areendam & Kalemli-Ozcan, Sebnem & Sayek, Selin, 2010. "Does foreign direct investment promote growth? Exploring the role of financial markets on linkages," Journal of Development Economics, Elsevier, vol. 91(2), pages 242-256, March.
    5. Marco Neuhaus, 2006. "The Impact of FDI on Economic Growth," Contributions to Economics, Springer, number 978-3-7908-1735-5.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Kenneth Burdett & Guido Menzio, 2018. "The (Q,S,s) Pricing Rule," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 892-928.

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    More about this item

    Keywords

    economic growth; foreign direct investment inflows; absorptive capacity; host / receiving country; home / source country;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity

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