The Impact Of Foreign Direct Investment On Sustainable Economic Growth, Respectively On Inequalities Between Countries

This study aims to examine the effects of FDI (foreign direct investment) on sustainable economic growth in 73 countries and to analyze the impact of FDI on inequalities between countries. The economic growth of a country is measured by the real gross domestic product per capita (GDPpc). The inequalities between countries are measured by the Sustainable Development Goals score, respectively the SDG10 score (reduced inequalities) and the SDG8 score (decent work and economic growth). The study shows that the statistically significant impact of exogenous variables on GDPpc or SDG10 score, differs from one group of countries to another, as follows: (1) in small countries (the size of the population), purchasing power index of exports (PPexp) negatively affects GDPpc, while productive capacities index and FDI inward positively affect GDPpc; (2) in large countries, PPexp (negatively) and GDP growth (positively) affect SDG10; (3) in developed countries, PPexp negatively affects GDPpc; (4) in developing countries Gross Fixed Capital Formation Inward (positively) and GDP growth (negatively) affect GDPpc. FDI inward and Gross Fixed Capital inward have negative impact on SDG10, while FDI outward and Gross Fixed Capital outward positively affect SDG10, only in developing countries; (5) in high-income countries, FDI positively affects GDPpc; (6) GDP growth has a positive and statistically significant impact on SDG10 only in upper-middle countries. The multiple regression coefficients that highlight the impact of exogenous variables on SDG8, do not highlight differences between high-income, upper-middle-income and lower-middle-income countries.