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FDI, Human Capital and Economic Growth: A panel data analysis of developing countries
Södertörn University, School of Social Sciences.
2015 (English)Independent thesis Advanced level (degree of Master (One Year)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

FDI inflow to developing countries has shown a drastic increase in the past few decades. Accordingly, many policy makers and academics are concerned about policies that attract FDI inflows to enhance economic growth from the positive spillover effects of FDI. Hence this study examines the general impact of FDI on the economic growth of 56 developing countries for the period 1985-2014. In order to analyze the growth effect of FDI into different macroeconomic situations, the sample countries are grouped into 24 low-income developing countries and 32 upper middle-income countries. The overall panel data analysis based on endogenous growth theory supported the positive growth effect of FDI for the pooled 56 countries and upper middle- income countries. However the growth effect of FDI for low-income countries tend to be statistically significant but negative. Moreover, to investigate the absorptive capacity of the host country an interactive term of FDI and human capital is included to estimate the general model. The regression results from the interactive term denote that the growth effect of FDI is dependent on the level of human capital in the host country. Hence a minimum level of human capital is essential in order to maximize and absorb the positive growth effect of FDI. 

Place, publisher, year, edition, pages
2015. , 34 p.
Keyword [en]
FDI, Human capital, Economic growth, Endogenous growth theory and Panel data analysis
National Category
URN: urn:nbn:se:sh:diva-29496OAI: diva2:902661
Subject / course
Social and Behavioural Science, Law
Available from: 2016-02-12 Created: 2016-02-11 Last updated: 2016-02-12Bibliographically approved

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