FDI Flows to Low-Income Countries: Global Drivers and Growth Implications

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Author/Editor: Jiro Honda, Geneviève Verdier, Amina Lahrèche-Révil, Era Dabla-Norris
Release Date: © June, 2010
ISBN : 978-1-45520-115-0
Stock #: WPIEA2010132
English
Stock Status: Available

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Description

What accounts for variations in FDI flows from advanced to developing countries? How have FDI inflows explained cross-country growth experiences? In this paper we tackle both these questions empirically for a large sample of middle and low-income countries. Two key results emerge: (i) lower borrowing costs and positive real-side external factors were increasingly important drivers of FDI outflows to low-income countries in the pre-crisis period; (ii) economic fundamentals, the strength of economic reforms, and commitment to macroeconomic discipline are crucial determinants of the growth dividends of FDI. Our paper suggests that low-income countries can turn to domestic policy solutions to mitigate the adverse effects of a potential decline in FDI in the post-crisis world.

Taxonomy

Business cycles , Economic development




More publications in this series: Working Papers


More publications by: Jiro Honda ; Geneviève Verdier ; Amina Lahrèche-Révil ; Era Dabla-Norris