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CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology KTH/CESIS Working Paper Series in Economics and Institutions of Innovation

No 58:
The Effects of FDI Inflows on Host Country Economic Growth

Andreas Johnson ()

Abstract: This paper discusses and models the potential of FDI inflows to affect host country economic growth. The paper argues that FDI should have a positive effect on economic growth as a result of technology spillovers and physical capital inflows. Performing both cross-section and panel data analysis on a dataset covering 90 countries during the period 1980 to 2002, the empirical part of the paper finds indications that FDI inflows enhance economic growth in developing economies but not in developed economies.

Keywords: foreign direct investment; economic growth; developing economies; developed economies; (follow links to similar papers)

JEL-Codes: F21; F23; O40; (follow links to similar papers)

57 pages, March 29, 2006

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