Publication: Foreign Direct Investment, Regulations, and Growth
Date
2006-04
ISSN
Published
2006-04
Author(s)
Busse, Matthias
Groizard, José Luis
Abstract
This paper explores the linkage between income growth rates and foreign direct investment (FDI) inflows. So far the evidence is rather mixed, as no robust relationship between FDI and income growth has been established. The authors argue that countries need a sound business environment in the form of good government regulations to be able to benefit from FDI. Using a comprehensive data set for regulations, they test this hypothesis and find evidence that excessive regulations restrict growth through FDI only in the most regulated economies. This result holds true for different specifications of the econometric model, including instrumental variable regressions.
Citation
“Busse, Matthias; Groizard, José Luis. 2006. Foreign Direct Investment, Regulations, and Growth. Policy Research Working Paper; No. 3882. © World Bank, Washington, DC. http://openknowledge.worldbank.org/entities/publication/2fee8144-9dae-575c-bf05-1a8cc2c679be License: CC BY 3.0 IGO.”
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