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Attracting FDI as a Development Strategy

Rundgren, Henrik LU (2015) NEKN01 20151
Department of Economics
Abstract
This paper is written in order to study the effects which foreign direct investment firms have on
developing host countries in order to find if countries' policies to actively attract FDI are a good
development strategy. In order to find how FDI effects the countries are a big set of possible effects
discussed and empirically tested using firm level data from 126 different developing countries. As
such, the paper discusses the issue of the effectiveness of FDI attracting policies on an as broad and
inclusive base as it finds possible. The result of doing this is it finds FDI firms, through being
superior to domestic firms and thereby more efficient and increasing the wage level, do likely cause
an increase in economic growth in the... (More)
This paper is written in order to study the effects which foreign direct investment firms have on
developing host countries in order to find if countries' policies to actively attract FDI are a good
development strategy. In order to find how FDI effects the countries are a big set of possible effects
discussed and empirically tested using firm level data from 126 different developing countries. As
such, the paper discusses the issue of the effectiveness of FDI attracting policies on an as broad and
inclusive base as it finds possible. The result of doing this is it finds FDI firms, through being
superior to domestic firms and thereby more efficient and increasing the wage level, do likely cause
an increase in economic growth in the less advanced economies; as a positive correlation between
economic growth and FDI is also found. However, it is also shown FDI firms by competing out the
domestic companies might have long run detrimental effects to the country's own industry. This,
combined with the result showing effects likely differ depending on the country, shows caution
needs to be taken in implementing FDI attracting policies. As such, the developing countries which
do implement FDI attracting policies are likely to get positive effects of doing so but should watch
out or they might in the end end up being worse off. (Less)
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author
Rundgren, Henrik LU
supervisor
organization
course
NEKN01 20151
year
type
H1 - Master's Degree (One Year)
subject
keywords
FDI, Development, Trade Policy, Development Strategy, FDI Effects
language
English
id
5466820
date added to LUP
2015-06-30 10:53:43
date last changed
2015-06-30 10:53:43
@misc{5466820,
  abstract     = {This paper is written in order to study the effects which foreign direct investment firms have on
developing host countries in order to find if countries' policies to actively attract FDI are a good
development strategy. In order to find how FDI effects the countries are a big set of possible effects
discussed and empirically tested using firm level data from 126 different developing countries. As
such, the paper discusses the issue of the effectiveness of FDI attracting policies on an as broad and
inclusive base as it finds possible. The result of doing this is it finds FDI firms, through being
superior to domestic firms and thereby more efficient and increasing the wage level, do likely cause
an increase in economic growth in the less advanced economies; as a positive correlation between
economic growth and FDI is also found. However, it is also shown FDI firms by competing out the
domestic companies might have long run detrimental effects to the country's own industry. This,
combined with the result showing effects likely differ depending on the country, shows caution
needs to be taken in implementing FDI attracting policies. As such, the developing countries which
do implement FDI attracting policies are likely to get positive effects of doing so but should watch
out or they might in the end end up being worse off.},
  author       = {Rundgren, Henrik},
  keyword      = {FDI,Development,Trade Policy,Development Strategy,FDI Effects},
  language     = {eng},
  note         = {Student Paper},
  title        = {Attracting FDI as a Development Strategy},
  year         = {2015},
}