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Does the Local Financial Market Enhance the Effect of Foreign Direct Investments?: A Study on Developing Countries
Jönköping University, Jönköping International Business School, JIBS, Business Administration.
2018 (English)Independent thesis Advanced level (degree of Master (Two Years)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

The effects associated with foreign direct investments onto a host economy are perceived to be multi folded. FDI is perceived to enhance, not only, the accumulation of capital in a host country, but also to promote productivity, enable introduction of new processes and skills as well as enable access to new markets. However, empirical research upon if foreign direct investments affects economic growth is ambiguous. The purpose of this thesis is due to such to investigate whether the local financial market enable FDI to affect growth positively. Hence, the aim of this paper is to establish if the domestic financial sector is a vital precondition for foreign direct investment to have a positive significant effect on GDP per capita growth for developing countries. By the use of panel data regressions and three regression models, 26 countries were investigated between the years 1996 and 2015. The empirical results enabled the conclusion that local financial markets do in fact improve the effect associated with foreign direct investment for the 26 countries investigated between the years 1996 and 2015. Thus, local financial markets are a significant and crucial precondition for FDI to affect a host economy's growth positively. Due to such, developing countries should aim towards preserving as well as developing their financial markets.

Place, publisher, year, edition, pages
2018. , p. 49
Keywords [en]
Foreign Direct Investment, Financial Markets, Developing Countries, Panel Regressions, Thresholds, Country Specific Results
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hj:diva-40737ISRN: JU-IHH-FÖA-2-20180697OAI: oai:DiVA.org:hj-40737DiVA, id: diva2:1222798
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Available from: 2018-06-28 Created: 2018-06-22 Last updated: 2018-06-28Bibliographically approved

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CiteExportLink to record
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Citation style
  • apa
  • ieee
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  • vancouver
  • Other style
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Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
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More languages
Output format
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