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Volume 43, Number 2, Spring 2010

E-ISSN: 1548-2278 Print ISSN: 0022-037X
DOI: 10.1353/jda.0.0059
Economic Growth and FDI Inflows: A Stochastic Frontier Analysis
Albert Wijeweera
Renato Villano
Brian Dollery
The Journal of Developing Areas, Volume 43, Number 2, Spring 2010, pp. 143-158 (Article)
DOI: 10.1353/jda.0.0059
HTML Version | PDF Version (265k)
Subject Headings:
Investments, Foreign -- Mathematical models.
Economic development -- Mathematical models.

Abstract:
Despite plausible theoretical grounds for presuming a positive relationship between foreign direct
investment inflows (FDI) and economic growth, existing empirical evidence on this nexus is
inconclusive. In an effort to add to the empirical literature, this paper estimates the relationship
between FDI and the rate of growth of GDP using a stochastic frontier model and employing
panel data covering 45 countries over the period 1997 to 2004. We find that FDI inflows exert a
positive impact on economic growth only in the presence of a highly skilled labour; corruption has
a negative impact on economic growth; and trade openness increases economic growth by
means of efficiency gains.
JEL Classifications:
C23, F21, F23
Keywords:
Economic growth, foreign direct investment inflows

http://muse.jhu.edu/journals/journal_of_developing_areas/summary/v043/43.2.wijeweera.html

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Volume 39, Number 2, Spring 2006

E-ISSN: 1548-2278 Print ISSN: 0022-037X
DOI: 10.1353/jda.2006.0002
The Effects of Foreign Direct Investment And Imports on Economic Growth: A Comparative
Analysis of Thailand and the Philippines (1970-1998)
Jamshid Damooei.
Tavakoli, Akbar.
The Journal of Developing Areas, Volume 39, Number 2, Spring 2006, pp. 79-100 (Article)
DOI: 10.1353/jda.2006.0002
HTML Version | PDF Version (297k)
Subject Headings:
Investments, Foreign -- Thailand -- History -- 20th century -- Mathematical models.
Investments, Foreign -- Philippines -- History -- 20th century -- Mathematical models.
Imports -- Thailand -- History -- 20th century -- Mathematical models.
Imports -- Philippines -- History -- 20th century -- Mathematical models.
Thailand -- Economic conditions -- 1986- -- Mathematical models.
Philippines -- Economic conditions -- 1986- -- Mathematical models.
The main objective of this paper is to estimate the output elasticity of foreign direct investment
(FDI) and imports in Thailand and in the Philippines during the period 1970–1998. Applying a
CES generalization of Cobb-Douglas production function, the output response to FDI is the same
in both countries, but imports affect Thailand more than the Philippines. The FDI contribution to
every one percentage growth point is about 0.05 of a percentage point in each country where
imports contribute about 0.47 of a percentage point in Thailand and 0.31 of a percentage point in
the Philippines. As a result, the foreign investment and imports contribute about 52 percent of
every one percentage growth point in Thailand compared to a lower 36 percent in the Philippines.
The remaining effects on the economic growth are from labor and domestic investment. Both
countries are labor intensive, but the impact of labor is more significant in the Philippines. The
Philippine economy is also more domestic capital intensive than the Thai economy. Furthermore,
the FDI path shows that the effect of foreign investment is more pronounced in the Philippines
during the second half of the 1990s, whereas the imports are more effective in Thailand since
1994. Therefore, the Philippine economy could gain more from directing its economic policies to
further liberalize its foreign investments. The Thai economy, on the other hand, should continue
its reliance on imported foreign technology in order to accelerate its economic growth.
foreign direct investment, imports, economic growth

http://muse.jhu.edu/journals/journal_of_developing_areas/summary/v039/39.2damooei.html
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Volume 44, Number 2, Spring 2011

E-ISSN: 1548-2278 Print ISSN: 0022-037X
DOI: 10.1353/jda.0.0113
Determinants of Foreign Direct Investment Flows to Pakistan
Ahmed Nawaz Hakro
Ikhtiar Ali Ghumro
The Journal of Developing Areas, Volume 44, Number 2, Spring 2011, pp. 217-242 (Article)
DOI: 10.1353/jda.0.0113
HTML Version | PDF Version (419k)
Subject Headings:
Investments, Foreign -- Pakistan -- Mathematical models.
Pakistan -- Economic policy -- Mathematical models.
Abstract:
This paper investigates the determinants of foreign direct investment (FDI) flows in dynamic
econometric model on Pakistan economy data set (1970-2007). VAR, VEC, generalized impulse
response functions, Granger causality, forecasting, three stage least square econometric
techniques are used in empirical analysis. Results suggest cost related, macroeconomic factors
and cumulative risk index variables are the major determinants emerged in short-run analysis.
The results also suggest long run relationships among FDI, openness and macro economic
factors consistently. Openness emerges as dominant factor in long run dynamics. Evidence
suggests that determinant variables that exhibit short run dynamics may also exhibit long run
dynamics and vice versa. The country requires to maintain macroeconomic stability and
continuity in openness policies of reform processes of the last 20 years, along with maintaining
cost advantage by controlling the level of prices, wage rate, cost of doing business and
investment friendly environment. This implies continuity of sustained stable macro economic
policies, improvement in country's risk profile followed by cost related and investment
environment improving factors.
JEL Classifications:
CO1, C5, E37, E60, F21, 23, 42, F50, O53
Keywords:
Foreign Direct Investment, VAR model, Granger-causality, Impulse Response Functions,
Variance Decompositions, Forecast, Error Variance, Determinants, and Policy Analysis, Pakistan

http://muse.jhu.edu/journals/journal_of_developing_areas/summary/v044/44.2.hakro.html
------------------------------
Volume 44, Number 2, Spring 2011
E-ISSN: 1548-2278 Print ISSN: 0022-037X
DOI: 10.1353/jda.0.0106
Foreign Direct Investment, Financial Development and Political Risks
Nabamita Dutta
Sanjukta Roy
The Journal of Developing Areas, Volume 44, Number 2, Spring 2011, pp. 303-327 (Article)
DOI: 10.1353/jda.0.0106
HTML Version | PDF Version (758k)
Subject Headings:
Economic development -- Political aspects.
Political stability -- Economic aspects.
Abstract:
Financial development is definitely a determinant of the extent of foreign direct investment (FDI)
inflow into an economy. Yet, the contribution of financial development (FD) can be dependent on
the political situation of the recipient nation. Higher political stability aids financial institutions to
reap the benefits of FDI efficiently. Our paper empirically investigates the role of political risk in
the association of FDI and FD. Using a panel of 97 countries, we show the relationship to be
strictly non-linear. The impact of FD on FDI becomes negative beyond a threshold level of FD.
However, we do find political risk factors to be affecting the relationship by altering the threshold
level of financial development.
JEL Classifications:
C23, F23, O16
Keywords:
Foreign Direct Investment, Financial Development, Political Risks

http://muse.jhu.edu/journals/journal_of_developing_areas/summary/v044/44.2.dutta.html
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Volume 41, Number 1, 2006

E-ISSN: 1542-4278 Print ISSN: 0023-8791
DOI: 10.1353/lar.2006.0001
Economic Reforms and Inflows of Foreign Direct Investment in Latin America
Biglaiser, Glen, 1963-
DeRouen, Karl R., 1962-
Latin American Research Review, Volume 41, Number 1, 2006, pp. 51-75 (Article)
DOI: 10.1353/lar.2006.0001
HTML Version | PDF Version (125k)
Subject Headings:
Investments, Foreign -- Latin America -- History -- 20th century.
Latin America -- Economic policy.
This paper seeks to explain the effect of different economic reforms for attracting foreign direct
investment (FDI) in Latin America. Controlling for macroeconomic and good governance factors,
we find that governments that implement economic reforms are not always more likely to attract
FDI inflows. Instead, attempts to minimize expropriation risk complement domestic financial and
trade reforms, which enhances foreign investor interest. Elements of both good governance and
reform are important. The results provide reasons for optimism—the fact that most economic
reforms are not essential for attracting FDI suggests that countries seeking FDI will encounter
fewer obstacles.

http://muse.jhu.edu/journals/latin_american_research_review/summary/v041/41.1biglaiser.html
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Volume 41, Number 1, Fall 2007

E-ISSN: 1548-2278 Print ISSN: 0022-037X
DOI: 10.1353/jda.2008.0024
Economic Freedom and Foreign Direct Investment in Developing Countries
Kapuria-Foreman, Vibha.
The Journal of Developing Areas, Volume 41, Number 1, Fall 2007, pp. 143-154 (Article)
DOI: 10.1353/jda.2008.0024
PDF Version (146k)
Subject Headings:
Developing countries -- Economic conditions -- Mathematical models.
Investments, Foreign -- Developing countries -- Mathematical models.
This paper employs cross-country growth regressions for a sample of developing countries to
examine the determinants of FDI. In addition to economic factors affecting foreign direct
investment, the analysis also tests for the role of institutional quality (enforcement of property
rights, corruption, etc.) and policy orientation factors (openness). The paper evaluates whether
foreign investment responds to changes in levels of economic freedom. In addition it tests
whether the insignificant coefficient found in previous studies is the result of the level of
aggregation in the economic freedom data. Finally, it disaggregates the data on economic
freedom and re-estimates the relationship between FDI and components of economic freedom.
Foreign direct investment is found to vary positively with increases in certain components of
economic freedom.
Foreign Direct Investment, Economic Freedom, FDI

http://muse.jhu.edu/journals/journal_of_developing_areas/summary/v041/41.1kapuria-
foreman.html
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Volume 81, Number 2, December 2002

E-ISSN: 1534-7605 Print ISSN: 0037-7732
DOI: 10.1353/sof.2003.0001
Embedded Economies: Social Relations as Determinants of Foreign Direct Investment in Central
and Eastern Europe
Bandelj, Nina.
Social Forces, Volume 81, Number 2, December 2002, pp. 411-444 (Article)
DOI: 10.1353/sof.2003.0001
HTML Version | PDF Version (298k)
Subject Headings:
Investments, Foreign -- Europe, Central.
Investments, Foreign -- Europe, Eastern.
Europe, Central -- Social conditions.
Europe, Eastern -- Social conditions.
Foreign direct investment (FDI) is considered a powerful catalyst in market transition. However,
FDI flows vary greatly across Central and East European transition countries. I compare and
contrast current approaches, which consider country characteristics as determinants of FDI, with
a relational approach that emphasizes institutional, political, economic, and cultural connections
between investor and host countries. Regression analyses of FDI flows in country dyads provide
little evidence for the effects of country characteristics. Political, migration, trade, and cultural
relations between investors and hosts have strong positive effects on FDI flows, and they add
considerably to the proportion of the explained cross-national variance. These findings highlight
the utility of a relational understanding of macroeconomic processes, as well as the importance of
examining how substantively different social relations shape economic exchange.

http://muse.jhu.edu/journals/social_forces/summary/v081/81.2bandelj.html
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Volume 40, Number 1, Fall 2006

E-ISSN: 1548-2278 Print ISSN: 0022-037X
DOI: 10.1353/jda.2007.0001
Racing to the Bottom for FDI? The Changing Role of Labor Costs and Infrastructure
Amaro, Andrea.
Miles, William.
The Journal of Developing Areas, Volume 40, Number 1, Fall 2006, pp. 1-14 (Article)
DOI: 10.1353/jda.2007.0001
HTML Version | PDF Version (442k)
Subject Headings:
Investments, Foreign -- Developing countries -- Econometric models.
Wages -- Developing countries -- Econometric models.
Infrastructure (Economics) -- Developing countries -- Econometric models.
The opening of low wage nations to FDI has created much more competition for investment since
the beginning of the 1990s. Observers in middle-income developing countries such as Brazil,
Malaysia and Mexico, which have benefited from FDI, express fears of losing to new, lower wage
destinations. Are such countries facing a dilemma, in which the very wage growth provided by
FDI must be reversed to continue attracting investment? Or, are there alternative means of
enticing multinational corporations, in particular physical infrastructure, which avoid a "race to the
bottom" in terms of living standards and in fact aid in development goals? Empirical results
indicate that while wages have become a more important determinant of FDI between the 1980s
and 1990s, so has infrastructure quality.

http://muse.jhu.edu/journals/journal_of_developing_areas/summary/v040/40.1amaro.html
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Volume 26, Number 1, April 2009
E-ISSN: 1793-2831 Print ISSN: 0217-4472
Sudden Surge in FDI and Infrastructure Bottlenecks: The Case in Vietnam
Tien Quang Tran
ASEAN Economic Bulletin, Volume 26, Number 1, April 2009, pp. 58-76 (Article)
HTML Version | PDF Version (373k)
Subject Headings:
Investments, Foreign -- Vietnam.
Vietnam -- Economic conditions -- 1975-
Infrastructure (Economics) -- Vietnam.
Abstract:
Through examining trends and patterns of foreign direct investment (FDI) in Vietnam over the
twenty years of reform (1986–2008), this paper found a big increase in registered FDI recently.
This is not in accordance with the increase in actual capital disbursement because of low
absorptive capacity of the economy in terms of poor infrastructure, restricted and unstable policy,
and weak competitive capacity of domestic firms. Moreover, newly massive flows of FDI brought
an explosion to infrastructure development in the form of office buildings, hotels, industrial zones,
resident parks and ports. This could help to improve the situation of infrastructure because it has
not kept pace with the rapid economic growth over the past decade and are considered as major
constraints in attracting more FDI.

http://muse.jhu.edu/journals/asean_economic_bulletin/summary/v026/26.1.tran.html
------------------------------------------

Volume 44, Number 2, Spring 2011

E-ISSN: 1548-2278 Print ISSN: 0022-037X
DOI: 10.1353/jda.0.0113
Determinants of Foreign Direct Investment Flows to Pakistan
Ahmed Nawaz Hakro
Ikhtiar Ali Ghumro
The Journal of Developing Areas, Volume 44, Number 2, Spring 2011, pp. 217-242 (Article)
DOI: 10.1353/jda.0.0113
HTML Version | PDF Version (419k)
Subject Headings:
Investments, Foreign -- Pakistan -- Mathematical models.
Pakistan -- Economic policy -- Mathematical models.
Abstract:
This paper investigates the determinants of foreign direct investment (FDI) flows in dynamic
econometric model on Pakistan economy data set (1970-2007). VAR, VEC, generalized impulse
response functions, Granger causality, forecasting, three stage least square econometric
techniques are used in empirical analysis. Results suggest cost related, macroeconomic factors
and cumulative risk index variables are the major determinants emerged in short-run analysis.
The results also suggest long run relationships among FDI, openness and macro economic
factors consistently. Openness emerges as dominant factor in long run dynamics. Evidence
suggests that determinant variables that exhibit short run dynamics may also exhibit long run
dynamics and vice versa. The country requires to maintain macroeconomic stability and
continuity in openness policies of reform processes of the last 20 years, along with maintaining
cost advantage by controlling the level of prices, wage rate, cost of doing business and
investment friendly environment. This implies continuity of sustained stable macro economic
policies, improvement in country's risk profile followed by cost related and investment
environment improving factors.
JEL Classifications:
CO1, C5, E37, E60, F21, 23, 42, F50, O53
Keywords:
Foreign Direct Investment, VAR model, Granger-causality, Impulse Response Functions,
Variance Decompositions, Forecast, Error Variance, Determinants, and Policy Analysis, Pakistan

http://muse.jhu.edu/journals/journal_of_developing_areas/summary/v044/44.2.hakro.html
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Volume 26, Number 3, December 2009

E-ISSN: 1793-2831 Print ISSN: 0217-4472
The Impact of Regional Integration and Third-Country Effects on FDI: Evidence from ASEAN
Nathapornpan Piyaareekul Uttama
Nicolas Peridy
ASEAN Economic Bulletin, Volume 26, Number 3, December 2009, pp. 239-252 (Article)
HTML Version | PDF Version (248k)
Subject Headings:
Investments, Foreign -- Southeast Asia.
Southeast Asia -- Foreign economic relations.
Abstract:
This paper is aimed at providing a better understanding of FDI determinants in the main ASEAN
countries through new developments in FDI theories. This paper simultaneously explores
bilateral, third-country as well as regional integration as determinants for FDI. As an extension to
the exisiting literature, it first proposes a theoretical framework which builds on and extends the
work of Baltagi, Egger, and Pfaffermayr (2007) by including the impact of regional integration.
The theoretical model is then tested empirically for FDI flows from the United States to five
ASEAN countries, i.e., Singapore, Malaysia, Thailand, Indonesia and Philippines, over the period
1995–2007 for fifteen industries. Alternative panel data models are considered, especially models
with spatially correlated residuals. The results show that third-country effects and regional
integration are significant determinants of FDI in ASEAN countries, especially for vertical and
complex vertical FDI.
Keywords:

http://muse.jhu.edu/journals/asean_economic_bulletin/summary/v026/26.3.uttama.html
------------------------------------