This paper examines the effect of foreign direct investments, FDI, on economic growth in developing countries. This is done by the presentation of a theoretical framework, in which technological transfer and the learning of new technologies is considered to be the engine of growth along with a critical examination of a number of empirical studies on the subject. I will later on perform a discussion of the underlying conditions for FDI to work efficiently along with the implications for Sub-Saharan Africa regarding FDI inflows. The implications are studied within a framework that considers human capital as an important channel through which the potential benefits arising from FDI may be realized.
Contents
1. Introduction
1.1 Purpose
1.2 Method
2. Theoretical framework
2.1 A simple model of growth and development (Jones 2002)
2.2 Steady-state analysis
2.3 The benefits of FDI
3. Empirical analysis
3.1 Explanatory variables
Table 1 – A research summary of empirical studies
regarding FDI and economic growth
4. Methodological problems
5. Implications for Sub-Saharan Africa
5.1 Incentives for FDI
5.2 The Sub-Saharan African dummy
5.3 The absorptive capacity and human capital
5.4 The human capital threshold
5.5 Non-linearity
6. Conclusions
References
Appendix
Author: Nilsson, Johanna
Source: Uppsala University Library
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