Foreign Direct Investment and Economic Growth: a Real Relationship or Wishful Thinking?

Several theories have been advanced on the beneficial effect of foreign direct investment (FDI) on growth. However, mixed empirical findings have resulted in a long-standing debate. This study explores the global FDI–growth relationship through an ‘informed’ econometric analysis predicated on substantial guidance obtained from a detailed investigation of 880 estimates reported in 108 published studies. With model uncertainties alleviated and the core specification benchmarked against the aforementioned assessment, our econometric analysis, utilizing a global sample of 140 countries, documents robust and clear findings regarding the cross-country FDI–growth relationship.