Cookies?
Library Header Image
LSE Research Online LSE Library Services

Growth and the quality of foreign direct investment: is all FDI equal?

Alfaro, Laura and Charlton, Andrew (2007) Growth and the quality of foreign direct investment: is all FDI equal? CEPDP, 830. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 9780853280958

[img]
Preview
PDF
Download (283kB) | Preview
Identification Number: 830

Abstract

In this paper we distinguish different “qualities” of FDI to re-examine the relationship between FDI and growth. We use ‘quality’ to mean the effect of a unit of FDI on economic growth. However this is difficult to establish because it is a function of many different country and project characteristics which are often hard to measure Hence, we differentiate “quality FDI” in several different ways. First, we look at the possibility that the effects of FDI differ by sector. Second, we differentiate FDI based on objective qualitative industry characteristics including the average skill intensity and reliance on external capital. Third, we use a new dataset on industry-level targeting to analyze quality FDI based on the subjective preferences expressed by the receiving countries themselves. Finally, we use a two-stage least squares methodology to control for measurement error and endogeneity. Exploiting a new comprehensive industry level data set of 29 countries between 1985 and 2000, we find that the growth effects of FDI increase when we account for the quality of FDI.

Item Type: Monograph (Discussion Paper)
Official URL: http://cep.lse.ac.uk
Additional Information: © 2007 the authors
Subjects: H Social Sciences > HG Finance
H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 18 Jul 2008 14:32
Last Modified: 01 Oct 2010 09:12
URI: http://eprints.lse.ac.uk/id/eprint/19666

Actions (login required)

View Item View Item

Downloads

Downloads per month over past year

View more statistics