FDI & economic growth in selected Country groups for (1989-2018)

Abstract

Theoretically, it is heavily believed that FDI is as a source of development, modernization, income, and employment growth and that FDI boosts the productivity of host countries and promotes economic growth. This paper examines, within a growth theory framework, the role which foreign direct investment (FDI) plays in the growth process in the context of different income group countries characterized by their per capita income. The paper tests (using time series data relating High, Middle- and Low-income countries) the hypothesis adopted is that FDI, enhance economic growth. The estimated indicators show evidence of rejecting Null hypothesis in the case of High- and Middle-income group countries but, vice versa the Null hypothesis is accepted for Low-income group countries.