Munich Personal RePEc Archive

Foreign direct investment. A bid for progress?

Ferro, Gustavo and Antón Rodríguez, Martín (2006): Foreign direct investment. A bid for progress?

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Foreign Direct Investment (FDI) is not a unique explanation for growth and progress, but is one of the more useful indicators of the open opportunities. It reveals preferences of the developed countries’ private sector, while the emerging economies seem to participate in a global bid. That bid is for capital, for the technology and know-how normally associated to investments, and for the final award, progress and development. Besides policies, politics and initial conditions, the economy matters. An estimation of economic determinants to FDI is done, and to take into account best relative results, an econometric frontier is calculated in order to determine how do the more efficient in attracting FDI. Some new perspective is added to conventional wisdom: there are countries, which are in some sense “more efficient producers” of FDI. The efficient frontier approach could shed some light of the link from sowing to reaping. Some shocking results were attained, when we tried to ask the question “Which are the best harvesters?” The more “sexiest” countries are not the more efficient producers of FDI in our ranking.

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