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Do multinational enterprises contribute to convergence or divergence? A disaggregated analysis of US FDI

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dc.creator Mayer-Foulkes, David
dc.creator Nunnenkamp, Peter
dc.date 2005
dc.date.accessioned 2013-10-16T06:17:09Z
dc.date.available 2013-10-16T06:17:09Z
dc.date.issued 2013-10-16
dc.identifier http://hdl.handle.net/10419/3489
dc.identifier ppn:484879669
dc.identifier.uri http://koha.mediu.edu.my:8181/xmlui/handle/10419/3489
dc.description It is a widely held belief that foreign direct investment (FDI) has a positive effect on economic growth. We test this hypothesis by performing convergence regressions derived from a model of endogenous technological change. We estimate the rate of growth in per-capita income, relative to the per-capita income of the United States, in terms of US FDI, human development, financial development, and trade. We apply a panel approach, instrumenting for explanatory variables and correcting for correlated errors by clustering by countries. The heterogeneity of FDI is taken into account by considering various FDI-related activities in addition to the conventionally used FDI stocks and flows. Furthermore, we draw on industry-specific FDI data, rather than exclusively on aggregated data. Our empirical analysis puts into question the currently prevailing euphoria about FDI as a means to induce economic catching-up processes of developing countries. We conclude that the central challenge facing policymakers is not to attract FDI, but to improve the local conditions required to benefit from the widely perceived unique advantages of FDI. In addition, our findings support the proposition that FDI stocks do not adequately reflect FDI-related economic activities.
dc.language eng
dc.publisher Kiel Institute for the World Economy (IfW) Kiel
dc.relation Kieler Arbeitspapiere 1242
dc.rights http://www.econstor.eu/dspace/Nutzungsbedingungen
dc.subject F23
dc.subject O40
dc.subject ddc:330
dc.subject Foreign direct investment
dc.subject Heterogeneity of FDI
dc.subject Growth effects
dc.subject Convergence regressions
dc.subject Direktinvestition
dc.subject Amerikanisch
dc.subject Entwicklungskonvergenz
dc.subject Technologietransfer
dc.subject Schätzung
dc.subject Entwicklungsländer
dc.subject Welt
dc.subject USA
dc.title Do multinational enterprises contribute to convergence or divergence? A disaggregated analysis of US FDI
dc.type doc-type:workingPaper

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