Publication

This paper assesses the impact of foreign direct investment (FDI) on economic development in developing countries. The authors argue that the results of most empirical studies are ambiguous because of highly aggregated FDI data. They differentiate between resource-seeking, market-seeking and efficiency-seeking FDI analyzing US FDI stocks in major sectors and specific manufacturing industries in a large number of developing countries. They show that host-country and industry characteristics as well as the interplay between both sets of characteristics have an important say on the growth impact of FDI and that positive effects are anything but guaranteed.