Skip to main navigation menu Skip to main content Skip to site footer

ECONOMETRICAL EVIDENCE ON THE EFFECTS OF FOREIGN DIRECT INVESTMENT ON THE ECONOMY OF RECEIVING COUNTRIES: A METHODS-BASED REVIEW

Affiliation
Senior lecturer of the "Digital economy and financial technologies" department of "University of management and future technologies".

Abstract

This article reviews global empirical studies on the impact of inward foreign direct investment (FDI) using key econometric methods. While many studies confirm that FDI positively affects growth, productivity and employment, the results vary significantly depending on the method used and country -specific conditions. The review underscores the importance of selecting appropriate econometric techniques tailored to data availability and policy objectives in countries like Uzbekistan.

Keywords

foreign direct investment, economic growth, econometric methods, panel data, causality, FDI absorptive capacity 68


References

  1. Aitken, B. J., & Harrison, A. E. (1999). Do domestic firms benefit from direct foreign investment? Evidence from Venezuela. American Economic Review, 89(3), 605 –618. https://doi.org/10.1257/aer.89.3.605
  2. Alfaro, L., Chanda, A., Kalemli -Ozcan, S., & Sayek, S. (2004). FDI and economic growth: The role of local financial markets. Journal of International Economics, 64(1), 89 –
  3. https://doi.org/10.1016/S0022 -1996(03)00081 -3
  4. Alfaro, L., Chanda, A., Kalemli -Ozcan, S., & Sayek, S. (2010). Does foreign direct investment promote growth? Exploring the role of financial markets on linkages. Journal of Development Economics, 91(2), 242 –256. https://doi.org/10.1016/j.jdeveco.2009.09.004
  5. Bengoa, M., & Sánchez -Robles, B. (2003). Foreign direct investment, economic freedom and growth: New evidence from Latin America. European Journal of Political Economy, 19(3), 529 –545. https://doi.org/10.1016/S0176 -2680(03)00011 -9
  6. Blonigen, B. A., & Wang, M. (2005). Inappropriate pooling of wealthy and poor countries in empirical FDI studies. In T. H. Moran, E. M. Graham, & M. Blomström (Eds.), Does Foreign Direct Investment Promote Development? (pp. 221 –244). Peterson Institute.
  7. Borensztein, E., De Gregorio, J., & Lee, J. -W. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45(1), 115 –135. https://doi.org/10.1016/S0022 -1996(97)00033 -0
  8. Carkovic, M., & Levine, R. (2002). Does foreign direct investment accelerate economic growth? University of Minnesota Working Paper.
  9. De Mello, L. R. (1999). Foreign direct investment -led growth: Evidence from time series and panel data. Oxford Economic Papers, 51(1), 133 –151. https://doi.org/10.1093/oep/51.1.133
  10. Derado, D., & Horvatin, D. (2019). Does FDI mode of entry have an impact on the host countryʼs labor productivity? An analysis of the EU countries. Economic Research - Ekonomska Istraživanja, 32(1), 1471 –1486. https://doi.org/10.1080/1331677X.2019.1638284
  11. Dinh, T. T. -H., Vo, D. H., V o, A. T., & Nguyen, T. C. (2019). Foreign direct investment and economic growth in the short run and long run: Empirical evidence from developing countries. Journal of Risk and Financial Management, 12(4), 176. https://doi.org/10.3390/jrfm12040176
  12. Hakim, D. R., Ahman, E., & Kusnendi, K. (2023). The effect of FDI on the host countriesʼ employment: A meta -regression analysis. Russian Journal of Economics, 9(2), 158–182. https://doi.org/10.32609/j.ruje.9.98252
  13. Hansen, H., & Rand, J. (2006). On the causal links between FDI and growth in developing countries. World Economy, 29(1), 21 –41. https://doi.org/10.1111/j.1467 -
  14. 00756.x
  15. Havranek, T., & Irsova, Z. (2011). Estimating vertical spillovers from FDI: Why results vary and what the true effect is. Journal of International Economics, 85(2), 234 –244. https://doi.org/10.1016/j.jinteco.2011.07.004
  16. Hoang, T. T., Wiboonchutikula, P., & Tubtimtong, B. (2010). Does foreign direct investment promote economic growth in Vietnam? ASEAN Economic Bulletin, 27(3), 295 –
  17. https://doi.org/10.1355/ae27 -3d
  18. Jamshed, B., Yang, J., Vatanjon, H., Chomen, D. A., & Alsaoub, N. (2024). The impact of foreign direct investment on economic growth: An evidence from Asian countries, 1995 –2021. American Journal of Industrial and Business Management, 14, 1775 –1804. https://doi.org/10.4236/ajibm.2024.1412089
  19. Javorcik, B. S. (2004). Does foreign direct investment increase the productivity of domestic firms? In search of spillovers through backward linkages. American Economic Review, 94(3), 605 –627. https://doi.org/10.1257/0002828041464605
  20. Kholdy, S., & Sohrabian, A. (2005). Financial markets, FDI, and economic growth: Granger causality tests using panel data. Journal of Developing Areas, 38(2), 1 –17.
  21. Li, X., & Liu, X. (2005). Foreign direct investment and economic growth: An increasingly endogenous relationship. World Development, 33(3), 393 –407. https://doi.org/10.1016/j.worlddev.2004.11.001
  22. Suyunov, A. (2021). Do foreign direct investments and bank credits affect employment in Uzbekistan? Evidence from a V AR analysis. International Journal of Economic Perspectives, 15(1), 98 –110.

Downloads

Download data is not yet available.