FDI and Economic Growth : An Empirical Study of Lower-middle Income Economies

• Main Author: Ngo Ngoc, Qui
• Format: Others
• Language: English
• Published: Högskolan i Jönköping, Internationella Handelshögskolan 2019
• Subjects: Foreign direct investment; FDI; Economic Growth; Lower-middle income economies; Education; Neoclassical growth theory; Endogenous growth theory; Economics; Nationalekonomi
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:hj:diva-44025

Within a panel data context with fixed effects method, using data on a sample of 40 lower- middle income economies, this paper investigates whether and to what extent FDI stimulates economic growth over the period 2007-2017. The main finding of this paper highlights the complementary effects between FDI and education, suggesting that a certain level of education must be reached in order for FDI to contribute positively on economic growth. Further, the level of education in this sample set is below the level that is considered as adequate in order to spur economic growth and thus this affects the absorptive capacity. This paper can only confirm that there is a certain association between FDI and economic growth and cannot confirm the widespread belief that FDI stimulates economic growth due to that the estimated models more often than not provided insignificant results.