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The Effects of Foreign Investment on Overall and Sectoral Growth in Third World States

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  • John M. Rothgeb Jr

    (Department of Political Science, Boston University)

Abstract

This research examines the impact of flows and stocks of foreign investment on growth in Third World countries. Overall growth in GDP per capita and in agriculture, manufacturing, transportation and com munications, and domestic trade are investigated. In addition to foreign investment, variables relating to domestic investment, population, and wealth are included in the analysis. The results indicate that stocks of foreign investment have a negative long-term effect on overall growth, while flows have a short-run positive effect. The variable with the single greatest impact on overall growth, however, is growth in domestic investment. The sectoral results indicate that foreign investment is positively related to growth in all sectors. The pattern of the findings, however, suggests that foreign investment has an initial disruptive effect on the economies of non-American underdeveloped states.

Suggested Citation

  • John M. Rothgeb Jr, 1984. "The Effects of Foreign Investment on Overall and Sectoral Growth in Third World States," Journal of Peace Research, Peace Research Institute Oslo, vol. 21(1), pages 5-14, March.
    • Handle: RePEc:sae:joupea:v:21:y:1984:i:1:p:5-14
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    Cited by:

    1. Quader, Syed Manzur, 2009. "Foreign Direct Investment in Bangladesh: An Empirical Analysis on its Determinants and Impacts," MPRA Paper 26134, University Library of Munich, Germany.

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