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  • 2012
  • Chapter
  • The Evidence and Impact of Financial Globalization

Foreign Direct Investment and Growth

By: Laura Alfaro and Matthew Johnson
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Abstract

This paper examines the evolution of the literature on the relationship between foreign direct investment (FDI) and growth in host countries, particularly developing countries. It provides a broad overview, with a focus on two elements that have recently become particularly important, (1) the role of complementary local conditions conducive to reaping the benefits of FDI (which relate to when FDI will generate growth) and (2) the mechanisms by which FDI creates positive externalities (which relate to how FDI generates growth).

Keywords

Economic Growth; Spillovers; Complementarity; Mechanism; Globalization; Foreign Direct Investment

Citation

Alfaro, Laura, and Matthew Johnson. "Foreign Direct Investment and Growth." Chap. 20 in The Evidence and Impact of Financial Globalization, edited by Gerard Caprio, 299–307. Elsevier, 2012.
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About The Author

Laura Alfaro

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More from the Authors
  • Distributional Consequences of Monetary Policy Across Races: Evidence from the U.S. Credit Register By: Laura Alfaro, Ester Faia and Camelia Minoiu
  • El Salvador: Launching Bitcoin as Legal Tender By: Laura Alfaro, Carla Larangeira and Ruth Costas
  • Can Evidence-Based Information Shift Preferences Towards Trade Policy? By: Laura Alfaro, Maggie X. Chen and Davin Chor
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