This paper utilizes regression analysis and panel data of one hundred fifty-four developing countries. The empirical model is operationalized using a modified Nelson-Phelps theoretical framework, endogenous growth theory, and Dunning’s OLI theory. The constructed model tests the concepts that Foreign Direct Investment inflows from developed countries significantly impact Total Factor Productivity growth, that Total Factor Productivity impacts output growth, and that typical FDI determinants related to institutional quality and policy manipulation impact developed country FDI inflows. This paper finds that FDI from developed countries do not significantly impact TFP growth, but that TFP growth does impact output growth. The institutional quality and policy variables that are hypothesized to impact developed FDI inflows are found insignificant. This research finds that the difference between a measurement of the developed leader country’s productivity and that of a given following developing country potentially impacts output growth.
Erhart, Charles, "Incentivizing Developed Country Foreign Direct Investment: An Efficient Means of Closing the Gap For Developing Countries?" (2012). Senior Independent Study Theses. Paper 5557.
Bachelor of Arts
Senior Independent Study Thesis
© Copyright 2012 Charles Erhart