Foreign Direct Investment: Good Cholesterol?

Abstract

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Project finance as a driver of economic growth in low‐income countries

“…It is also beneficial in terms of transfers of technology, managerial skills and labor practices, access to new markets and production networks and the import of corporate governance. Importantly, FDI does not rely on the existence of a well‐developed domestic financial market and firms can in part substitute the domestic financial market through FDI (Hausmann & Fernandéz‐Arias, 2001). Through FDI a firm exerts direct control over operations, reduces informational asymmetries, and can thus alleviate some of the problems associated with inadequate contract enforcement and poor protection of intellectual property rights.…”

The Quality of Institutions and Foreign Direct Investment

“…A different literature that is related to the present paper includes Aizmann and Spiegel (2002), Albuquerque (2003), Hausmann and Fernández‐Arias (2000), as well as Mody et al (2003). This literature focuses on the effects of institutions on the composition of capital flows.…”

Financial Globalization, Governance, and the Evolution of the Home Bias

“…14 14 Hausmann and Fernández‐Arias [2001] also point out that “the fact that international firms have access to better foreign institutions and markets may be a source of value that can be extracted by purchasing firms in the local market.” …”