Does Foreign Investment Improve or Worsens Aggregate Productivity? a Panel VAR Analysis

This paper studies the effects of Foreign Direct Investment (FDI) on aggregate productivity growth. To address this question, I use a Panel VAR whose estimator is System GMM for 134 countries and I divide those countries in High-, Middle- and Low-Income Countries for period 1990-2018. I find that the FDI have positive and significant impacts on the aggregate productivity growth in high, and low incomes countries, and positive but not significant impacts in middle income countries when I control by human capital, capital stock and macroeconomics variables