FDI and economic growth: the role of natural resources?

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F00216208%3A11230%2F18%3A10374876" target="_blank" >RIV/00216208:11230/18:10374876 - isvavai.cz</a>

Alternative codes found

RIV/26482789:_____/18:N0000055

Result on the web

<a href="https://doi.org/10.1108/JES-05-2015-0082" target="_blank" >https://doi.org/10.1108/JES-05-2015-0082</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1108/JES-05-2015-0082" target="_blank" >10.1108/JES-05-2015-0082</a>

Result language

angličtina

Original language name

FDI and economic growth: the role of natural resources?

Original language description

The purpose of this paper is to investigate the foreign direct investments (FDI)-growth nexus and the impact of natural resource abundance in the host country on the FDI-growth nexus. Design/methodology/approach: For a large data set of 104 countries for the period 1996-2015, Arellano and Bond&apos;s GMM estimation method is applied to investigate the impact of FDI inflow on economic growth and the role of the natural resource sector on the FDI-growth relationship. Findings: The paper found a positive and significant effect of FDI inflows on economic growth of the host country. However, the impact of FDI inflows on economic growth changes with the changes in the size of the natural resource sector. The estimated positive impact of FDI inflows on economic growth declines with the expansion in the size of natural resources. Beyond a certain limit, a further expansion in the size of natural resource sector will lead to a negative effect of FDI on economic growth. Research limitations/implications: The paper found a positive and significant impact of FDI inflows on economic growth of the host country. However, the impact of FDI inflows on economic growth changes with the changes in the size of the natural resource sector. The estimated positive impact of FDI inflows on economic growth declines with the expansion in the size of the natural resources. Beyond a certain limit, a further expansion in the size of the natural resource sector will lead to a negative effect of FDI on economic growth. The same analysis is repeated for groups of countries divided into different income groups. FDI inflows are found to have significant growth enhancing role in all three groups of countries. However, FDI inflows-induced growth was found to be more pronounced in the middle- and low-income countries compared to high-income countries. Further, FDI-induced economic growth is slowed down in low-income and middle-income countries by the increase in size of the natural resource sector. While in high-income countries, the size of the natural resource sector has no significant role on the FDI-growth nexus. Practical implications: While countries use their natural resource sector as an instrument to attract FDI into the countries, low- and middle-income countries face the dilemma of experiencing the resource curse in the form of watered down FDI-induced growth. Therefore, low- and middle-income countries need to try at the same time to attract FDI into the non-resources sector to keep the relative size of the natural resource sector low as to avoid hampering the FDI-induced economic growth. High-income countries, on the other hand, do not experience the FDI-induced growth hampering impact of the natural resource sector. Therefore, high-income countries should attract FDI into the countries regardless of the sector attracting the foreign investments.

Czech name

—

Czech description

—

Type

J_SC - Article in a specialist periodical, which is included in the SCOPUS database

CEP classification

—

OECD FORD branch

50201 - Economic Theory

Project

—

Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2018

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Journal of Economic Studies

ISSN

0144-3585

e-ISSN

—

Volume of the periodical

45

Issue of the periodical within the volume

2

Country of publishing house

GB - UNITED KINGDOM

Number of pages

13

Pages from-to

283-295

UT code for WoS article

000430474100005

EID of the result in the Scopus database

2-s2.0-85045630960