Foreign Direct Investment and Economic Growth: Evidence from Cross‐Country Data for the 1990s

FDI Flows to Latin America: A Pooled and Cointegration Analysis, 1980-2014

“…However, in recent years, a number of studies focusing on the determinants (and impact) of FDI flows to several countries of the region have arisen as a result of the renewed surge in net flows to these countries beginning in the second half of the 1980s and the availability of reliable and methodologically consistent time series data for a number of countries (see Agosin, 1995;Bloomstrom and Wolff, 1994;Chowdhury and Mavrotas, 2006;DeMello, Jr., 1997;Ramasamy and Yeung, 2004;Ramirez 2005;Ram and Zhang, 2002;Ros, 1994;Zhang, 2001;and Vadlamannati and Tamazian, 2009). …”

“…However, from the standpoint of the host country the very factors which act as an incentive for FDI flows in the short run may prove detrimental to long-term economic development if they lead to a net outflow of resources, few backward and forward linkages (an -enclave‖ facility), the elimination of domestic firms that could have developed into successful enterprises without this premature exposure to competition, and limited transfers of technology and managerial knowhow [see Chang, 2008;ECLAC, 1998, pp. 89-91;Montecinos and Cordero, 2010;Ram and Zhang, 2002;and Yeager, 1999]. ISSN 2162-4860 2017 The nature and scope of government policies are also a highly important factor in determining whether FDI flows to developing economies such as Chile.…”

Economic and Institutional Determinants of FDI in the Chilean Case: An Empirical Analysis, 1960-2014

“…The importance of these net inflows is more fully appreciated by focusing on their evolution relative to these countries' gross fixed capital formation, since they are viewed as a source of investable resources to the host nation. ISSN 1948-5433 2017 Critics of FDI , however, contend that instead of increasing the investable resources of the host nation, FDI flows divert resources away from capital formation because they generate a substantial reverse flows in the form of remittances of profits and interest to the parent companies, as well as through the widespread practice of intra-firm transfer pricing (see Chang, 2008;Cypher and Dietz, 2003;Cypher, 2014;Figueroa, 1998;Plasschaert, 1994;and Ram and Zhang, 2002). In their view, in order to assess the net contribution of FDI to the financing of private capital formation, one must first deduct from gross FDI inflows the repatriation of profits and interest to the parent companies, often residing in the U.S. for many of the countries in question.…”

“…From a relative standpoint, the rise of Chile's stock of inward FDI is even more impressive, increasing from 58.8 percent of GDP in 2000 to 72 percent of GDP in 2010--by far, the highest share of any major country of the region, including Argentina, Brazil, Colombia, Mexico, Peru, and Venezuela (see ECLAC, 2007;and UNCTAD, 2016). In addition to the direct effects associated with a greater stock of FDI, several investigators argue that there are indirect positive spillover effects on overall efficiency that arise from enhanced competition generated by foreign firms, the transfer of needed technology and managerial knowhow to local firms, and trade-induced learning-by-doing effects as local firms attempt to overcome competition in the global market (see Armedariz and Larrain, 2017;Cypher, 2014;De Mello Jr., 1997;Ram & Zhang, 2002;and Vadlamannati and Tamazian, 2009). …”

FDI, Regulations and Growth

“…In a cross-sectional regression framework, Ram and Zhang (2002) Apart from data and methodological issues, a few studies have tried to find further reasons for the inconclusive evidence. Based on their results, Balasubramanyam et al (1996) note that FDI might promote growth only in export-promoting rather than in import-substituting countries and that, thus, openness to trade is essential for the growth effects of foreign investment.…”