Literature review of 100 empirical studies of Foreign Direct Investment: 1950-2015

Metaxas, Theodore and Kechagia, Polyxeni (2016): Literature review of 100 empirical studies of Foreign Direct Investment: 1950-2015.

Abstract

International capital allocation influences has a social, political and economic impact on the trading countries. Thus, it has been investigated so as to determine the key factors of capital flows and their impact on the host country’s economy. The present essay involves a literature review of 100 empirical papers focusing on capital movement and in particular in Foreign Direct Investment (F.D.I.) inflows worldwide. The papers are discussed based on the statistical method applied, the sample chosen and the trends on the variables used. More recent empirical papers include larger samples of countries and the researchers don’t tend to focus on case studies. Furthermore, it is argued that the empirical studies involve countries of every geographical region despite the fact that most of them focus on the largest recipients of F.D.I., that is to say the Asian and the Latin American countries.

• Item Type: MPRA Paper
• Language: English
• Keywords: Foreign Direct Investment, Empirical Studies, Literature Review, Statistical Method
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F21 - International Investment ; Long-Term Capital Movements; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O47 - Empirical Studies of Economic Growth ; Aggregate Productivity ; Cross-Country Output Convergence

References

Adams S. (2009). Foreign Direct investment, domestic investment and economic growth in Sub – Saharan Africa, Journal of Policy Modeling, 31 (6): 939 – 949

Agosin M., Machado R. (2005). Foreign Investment in Developing Countries: Does it Crowd in Domestic Investment?, Oxford Development Studies, 33 (2): 149 – 162

Aitken B., Harrison A., Lipsey R. (1996). Wages and foreign ownership: A comparative study of Mexico, Venezuela and the United States, Journal of International Economics, 40(3-4): 345 – 371

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): 89-112

Ali F., Fiess N., MacDonald R. (2011). Climbing to the top? Foreign direct Investment and Property Right, Economic Inquiry, 49 (1): 289 – 302

Alsan M., Bloom D.E., Canning D. (2006). The effect of population health on foreign direct investment in flows to low – and middle – income countries, World Development, 34 (4): 613 – 630

Anwar S., Cooray A. (2012). Financial development, political rights, civil liberties and economic growth: Evidence from South Asia, Economic Modeling, 29 (3): 974 – 981

Anwar S., Cooray A. (2015). Financial flows and per capita income in developing countries, International Review of Economics & Finance, 35: 304 – 314

Arazmuradov A. (2015). Can Development Aid Help Promote Foreign Direct Investment? Evidence from Central Asia, Economic Affairs, 35 (1): 123 – 136

Azémar C., Desbordes R. (2009). Public governance, health and foreign direct investment in Sub-Saharan Africa, Journal of African Economies, 18(4): 667 -709

Azman – Saini W.N.W., Law S.H., Ahmad A.H. (2010). FDI and economic growth: New evidence on the role of financial markets, Economics Letters, 107(2): 211 – 213

Bengoa M., Sanchez – Robles B. (2003). Foreign direct investment, economic freedom and growth: New evidence from Latin America, European Journal of Political Economy, 19 (3): 529 – 545

Bevan A., Estrin S. (2004). The determinants of foreign direct investment into European transition economies, Journal of Comparative Economics, 32(4): 775 – 787

Bevan A., Estrin S., Meyer K. (2004). Foreign investment location and institutional development in transition economies, International Business Review, 13(1): 43 – 64

Blomstrӧm M. (1986) Multinationals and market structure in Mexico, World Development, 14(4): 523 – 530

Blomstrӧm Μ., Persson Η. (1983). Foreign investment and spillover efficiency in an underdeveloped economy: Evidence from the Mexican manufacturing industry, World Development, 11(6): 493 – 501

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

Branson W., Hill R. (1971). Capital movements among major OECD countries: Some preliminary results, The Journal of Finance, 26(2): 269 – 286

Choi C. (2003). Does the Internet stimulate inward foreign direct investment? Journal of Policy Modeling, 25(4): 319 – 326

Christian J., Pagoulatos E. (1973). Domestic financial markets in developing economies: An econometric analysis, Kyklos, 26(1): 75 – 90

Cleeve E., Debrah Y., Yiheyis Z. (2015). Human Capital and FDI Inflow: An Assessment of the African Case, World Development, 74:1-14

Culem C. (1988). The locational determinants of direct investments among industrialized countries, European Economic Review, 32 (4): 885 – 904

d’ Arge R. (1969). Note on Customs Unions and Direct Foreign Investment, Economic Journal, 79(314): 324 – 333

Doytch N., Thelen N., Mendoza R.U. (2014). The impact of FDI on child labor: Insights from an empirical analysis of sectoral FDI data and case studies, Children and Youth Services Review, 47 (P2): 157 – 167

Doytch N., Uctum M. (2011). Does the worldwide shift of FDI from manufacturing to services accelerate economic growth? A GMM estimation study, Journal of International Money and Finance, 30 (3): 410 – 427

Drake Τ., Caves R. (1992). Changing determinants of Japanese foreign investment in the United States, Journal of Japanese and International Economies, 6(3): 228-246

Durham J.B. (2004). Absorptive capacity and the effects of foreign direct investment and equity foreign portfolio investment on economic growth, European Economic Review, 48(2): 285 – 306

Erbe R. (1970). Causes and effects of private capital movements in Germany, 1995-69, Kyklos, 23(4): 927 – 941

Ezcurra R., Guez – Pose A.R. (2013). Does Economic Globalization affect Regional Inequality? A Cross-country Analysis, World Development, 52: 92–103

Farrell R., Gaston N., Sturm J.E. (2004). Determinants of Japan’s foreign direct investment: An industry and country panel study, 1984 – 1998, Journal of the Japanese and International Economies, 18(2): 161 – 182

Fatehi K., Safizadeh H. (1994). The effect of sociopolitical instability on the flow of different types of foreign direct investment, Journal of Business Research, 31 (1): 65 – 73

Feeny S., Iamsiraroj S., McGillivray M. (2014). Growth and Foreign Direct Investment in the Pacific Island countries, Economic Modeling, 37: 332 – 339

Feldstein M. (1983). Domestic saving and international capital movements in the long run and the short run, European Economic Review, 21 (1-2): 129 – 151

Fereidouni H.G. (2013). Foreign direct investments in real estate sector and CO2 emission: Evidence from emerging economies, Management of Environmental Quality, 24 (4): 463 – 476

Fillat C., Woerz J. (2011). Good or bad? The influence of FDI on productivity growth. An industry level analysis, Journal of International Trade and Economic Development, 20 (3): 293 – 328

Fung K.C., IIzaka H., Siu A. (2003). Japanese direct investment in China, China Economic Review, 14 (3): 304-315

Globerman S., Shapiro D. (2002). Global foreign direct investment flows: The role of governance infrastructure, World Development, 30 (11): 1899 – 1919

Gohou G., Soumaré I. (2012). Does Foreign Direct Investment Reduce Poverty in Africa and are There Regional Differences?, World Development, 40 (1): 75 – 95

Goswami G.G., Haider S. (2014). Does political risk deter FDI inflow?: An analytical approach using panel data and factor analysis, Journal of Economic Studies, 41 (2): 233 – 252

Griffin K. (1968). Coffee and the Economic Development of Colombia, Bulletin of the Oxford University Institute of Economics & Statistics, 30(2): 105 – 127

Griffin K. (1970). Foreign Capital, Domestic Savings and Economic Development, Bulletin of the Oxford University Institute of Economics & Statistics, 32(2): 99 – 112

Gui – Diby S.L., Renard M.F. (2015). Foreign Direct Investment Inflows and the Industrialization of African Countries, World Development, 74: 43- 57

Hansen Η., Rand J. (2006). On the causal links between FDI and growth in developing countries, World Economy, 29 (1): 21 – 41

Healet D. (1973). Foreign capital and Exports in Economic Development: The Experience of Eight Asian Countries, Economic Record, 49(3): 394 – 419

Hübler M., Keller A. (2010). Energy savings via FDI? Empirical evidence from developing, Environment and Development Economics, 15 (1): 59-80

Imai K., Gaiha R., Ali A., Kaicker N. (2014). Remittances, growth and poverty: New evidence from Asian countries, Journal of Policy Modeling, 36 (3): 524 – 538

Jadhav P. (2012). Determinants of foreign direct investment in BRICS economies: Analysis of economic, institutional and political factor, Procedia – Social and Behavioral Sciences, 37: 5-14

Kashcheeva M. (2013). The role of foreign direct investment in the relation between intellectual property rights and growth, Oxford Economic Papers, 65 (3): 699 – 720

Kasuga H. (2007). Evaluating the impacts of foreign direct investment, aid and saving in developing countries, Journal of International Money and Finance, 26 (2): 213 – 228

Kaur et al (2013). Financial System Development and Foreign Direct Investment: A Panel Data Study for BRIC Countries, Global Business Review, 14 (4): 729 – 742

Ketkar K. (1993). Public sector banking, efficiency and economic growth in India, World Development, 21 (10): 1658 – 1697

Kharas H., Levinsohn J. (1988). LDC savings rates and debt crises, World Development, 16(7): 779 – 786 Kim S. (1972). Foreign assistance and Korea’s economic growth, Australian Economic Papers, 11(18):89 – 102

Kinda T. (2010). Investment Climate and FDI in Developing Countries: Firm-Level Evidence, World Development, 38 (4): 498 – 513

Kinuthia B.K., Murshed S.M. (2014). FDI determinants: Kenya and Malaysia compared, Journal of Policy Modeling, 37: 388 – 400

Kouri P. (1975). The hypothesis of offsetting capital flows: A case study of Germany, Journal of Monetary Economic, 1(1): 21-39

Kouri P. Porter M. (1974). International Capital Flows and Portfolio Equilibrium, Journal of Political Economy, 82(3): 443 – 467

Krainer R. (1967). Resource Endowment and the Structure of Foreign Investment, The Journal of Finance, 22(1): 49 – 57

Kumar N. (1996) Intellectual property protection, market orientation and location of overseas R&D activities by multinational enterprises, World Development, 24 (4): 673 – 688

Kwack S. (1972). A Model of U.S. Direct Investment Abroad: A Neoclassical Approach, Economic Inquiry, 10(4): 376 – 383

Lessmann C. (2013). Foreign direct investment and regional inequality: A panel data analysis. China Economic Review, 24 (1): 129 – 149

Li X., Liu X. (2005). Foreign Direct Investment and economic growth: An increasingly endogenous relationship. World Development, 33 (3): 393 – 407

Lin S.C., Kim D.H., Lee Y.H. (2015). Financial development and the fdi-inequality nexus, Contemporary Economic Policy, 33 (3): 513 – 534 Thangavelu S.M., Narjoko D. (2014). Human capital, FTAs and foreign direct investments flows into ASEAN, Journal of Asian Economics, 35: 65-76

Liu X., Wang C. (2003). Does foreign direct investment facilitate technological progress? Evidence from Chinese industries, Research Policy, 32(6): 945-953

Masron T.A., Nor E. (2013). FDI in ASEAN-8: Does institutional quality matter?, Applied Economics Letters, 20: 186–189

Meller P., O’Ryan R., Solimano A. (1996). Growth, equity and the environment in Chile: Issues and evidence, World Development, 24(2): 255 – 272

Metwally Μ. Tamaschke R. (1994). The interaction among foreign debt, capital flows and growth: Case studies, Journal of Policy Modeling, 16(6): 597 – 608

Mina W. (2007). The location determinants of FDI in the GCC countries, Journal of Multinational Financial Management, 17(4): 336 – 348

Morrissey O., Udomkerdmongkol M. (2012). Governance, Private Investment and Foreign Direct Investment in Developing Countries, World Development, 40 (3): 437 – 445

Ndikumana L., Verick S. (2008). The linkages between FDI and domestic investment: Unravelling the developmental impact of foreign investment in sub-Saharan Africa, Development Policy Review, 26(6): 713 – 726

Noorbakhsh F., Paloni A., Youssef A. (2001). Human Capital and FDI Inflows to Developing Countries: New Empirical Evidence, World Development, 29(9): 1593 – 1610

Omri A., Nguyen D.K., Rault C. (2014). Causal interactions between CO2 emissions, FDI and economic growth: Evidence from dynamic simultaneous-equation models, Economic Modeling, 42: 382-389

Pastor Μ., Hilt Ε. (1993). Private investment and democracy in Latin America, World Development, 21(4): 489 – 507

Pazienza P. (2015). The Environmental Impact of the FDI Inflow in the Transport Sector of OECD Countries and Policy Implications, International Advances in Economic Research, 21 (1): 105 – 116

Pesmazoglou J. (1972). Growth, investment and saving rations: Some long and medium term associations by groups of countries, Bulletin of the Oxford University Institute of Economics & Statistics, 34(4): 309 – 328

Rammal H.G., Zurbruegg R. (2006). The impact of regulatory quality on intra-foreign direct investment flows in the ASEAN markets, International Business Review, 15 (4): 401 – 414

Rothgeb J. (1984). Investment penetration in manufacturing and extraction and external public debt in Third World states, World Development, 12(11-12): 1063-1075

Rothgeb J. (1988). Direct foreign investment in mining and manufacturing in underdeveloped states, The Social Science Journal, 25 (1): 21 – 43

Sadik A.T., Bolbol A.A. (2001). Capital flows, FDI and technology spillovers: Evidence from Arab countries, World Development, 29 (12): 2111 – 2125

Samargandi N., Fidrmuc J., Ghosh S. (2015). Is the Relationship Between Financial Development and Economic Growth Monotonic? Evidence from a Sample of Middle-Income Countries, World Development, 68:66-81

Santiago C. (1987). The impact of foreign direct investment on export structure and employment generation, World Development, 15(3): 317 – 328

Savvides A. (1990). LDC creditworthiness and foreign capital inflows: 1980 – 1986, Journal of Development Economics, 34 (1-2): 309 – 327

Scaperlanda A. (1967). The EEC and US Foreign Investment: Some Empirical Evidence, Economic Journal, 77(305): 22 – 26

Scaperlanda A., Mauer L. (1969). The Determinants of U.S. Direct Investment in the E.E.C., The American Economic Review, 59(4): 558 – 568

Schmitz A. (1970). The Impact of Trade Blocs on Foreign Direct Investment, The Economic Journal, 80(319): 724 – 731

Schneider P.H. (2005). International trade, economic growth and intellectual property rights: A panel data study of developed and developing countries, Journal of Development Economics, 78 (2): 529 – 547

Seyoum M., Wu R., Lin J. (2014). Foreign direct investment and trade openness in sub-saharan economies: A panel data granger causality analysis, South African Journal of Economics, 82 (3): 402 – 421

Smits W.J.B. (1988). Foreign direct investment and export and import value – A cross – section study for thirty less developed countries, De Economist, 136 (1): 91 – 117

Stoneman C. (1975). Foreign capital and economic growth, World Development, 3(1): 11-26

Suliman A.H., Mollick A.V. (2009). Human capital development, war and foreign investment in sub-Saharan Africa, Oxford Development Studies, 37(1): 47 – 61

te Velde D.W., Xenogiani T. (2007). Foreign direct investment and international skill inequality, Oxford Development Studies, 35 (1): 83 – 104

Tintin C. (2013). The determinants of foreign direct investment inflows in the Central and Eastern European Countries: The importance of institutions, Communist and Post – Communist Studies, 46 (2): 287 – 298

Tiwari A.K., Murascu M. (2011). Economic growth and FDI in Asia: A Panel – Data Approach, Economic Analysis and Policy, 41 (2): 173 – 187

Tsai P.L. (1991). Determinants of foreign direct investment in Taiwan: An alternative approach with time – series data, World Development, 19 (2-3): 275 – 285

Vadlamannati K.C., Tamazian A. (2009). Growth effects of FDI in 80 developing economies: The role of policy reforms and institutional constraints. Journal of Economic Policy Reform, 12 (4): 299 - 322

Vijayakumar N., Sridharan P., Rao K.C.S. (2010). Determinants of FDI in BRICS countries: A panel analysis, International Journal of Business Science and Applied Management, 5 (3): 1-13

Wei S. J. (1995). Attracting foreign direct investment: Has Chine reached its potential?, China Economic Review, 6(2): 187 – 199

Weisskopf T. (1972a). The impact of foreign capital inflow on domestic savings in underdeveloped countries, Journal of International Economics, 2(1):25-38

Weisskopf T. (1972b). An Econometric Test of Alternative Constrains on the Growth of Underdeveloped Countries, The Review of Economics and Statistics, 54(1): 67-78

Xaypanya P., Rangkakulnuwat P., Paweenawat S.W. (2015). The determinants of foreign direct investment in ASEAN: The first differencing panel data analysis, International Journal of Social Economics, 42 (3): 239 – 250