Work

Foreign direct investment, financial development and economic growth

Year: 2003

Type: article

Abstract: This article argues that the development of the financial system of the recipient country is an important precondition for FDI to have a positive impact on economic growth. A more developed financial system positively contributes to the process of technological diffusion associated with FDI. The article empirically investigates the role the development of the financial system plays in enhancing the positive relationship between FDI and economic growth. The empirical investigation presented in the article strongly suggests that this is the case. Of the 67 countries in data set, 37 have a sufficiently developed financial system in order to let FDI contribute positively to economic growth. Most of these countries are in Latin America and Asia.

Source: The Journal of Development Studies

DOI: 10.1080/00220380412331293707

Authors: Niels Hermes, Robert Lensink

Institution: University of Groningen

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Industry, innovation and infrastructure

Open Access status: green

OpenAlex ID: W2155415075

FWCI: 36.42

Cites: 26

Cited by: 1,250

Related to: 10