文档介绍：CAUSAL LINKS BETWEEN FDI AND GROWTH 21
On the Causal Links Between
FDI and Growth in
Developing Countries
Henrik Hansen and John Rand
University of Copenhagen and Development Economics Research Group (DERG), Copenhagen
1. INTRODUCTION
HE inflow of foreign direct investment (FDI) increased rapidly during the
Tlate 1980s and the 1990s in almost every region of the world revitalising
the long and contentious debate about the costs and benefits of FDI inflows. On
one hand many would argue that, given appropriate policies and a basic level
of development, FDI can play a key role in the process of creating a better
economic environment. On the other hand, potential drawbacks do exist, includ-
ing a deterioration of the balance of payments, as profits are repatriated having
negative impacts petition in national markets. At present the consensus
seems to be that there is a positive association between FDI inflows and eco-
nomic growth, provided that receiving countries have reached a minimum level
of educational, technological and/or infrastructure development. However, as in
many other fields of development economics, there is not universal agreement
about the positive association between FDI inflows and economic growth.
Even if one accepts the positive association there is still the question of caus-
ality. Does FDI cause (long-run) growth and development or do fast-growing
economies attract FDI flows as panies search for new market
and profit opportunities? Theoretically, neither of the links can be ruled out and
this is probably the reason why the causality issue has been the topic of so many
recent studies. As documented in Section 2, at least six studies precede our study,
and it is reasonable to ask if there is a need for yet another look at causality
between FDI and growth in developing countries.
We aim to contribute to the existing literature in three dimensions. First of all
we take a close look at the model specification. This is moti