Economics Working Papers
 

Document Type

Article

Publication Date

3-2004

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.

Comments

Originally offered as part of the NBER Working Paper Series, Working Paper No. 10378, http://www.nber.org/papers/w10378.

Prepared for the Institute of International Economics conference, “The Impact of Foreign Direct Investment on Development: New Measurements, New Outcomes, New Policy Approaches,” held in Washington, DC, in April 2004. The views expressed herein are those of the authors and not necessarily those of the National Bureau of Economic Research.

© 2004 by Bruce A. Blonigen and Miao Wang. All rights reserved. Short sections of text, not to exceed two paragraphs, may be quoted without explicit permission provided that full credit, including © notice, is given to the source.

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