An analysis of the relationship between foreign direct investment and economic growth

Jonathan Andrew Batten, Xuan Vinh Vo

Research output: Contribution to journalArticleResearchpeer-review

78 Citations (Scopus)


Employing a panel data modelling technique, we contribute to two critical research issues: what is the link between Foreign Direct Investment (FDI) and economic growth and does the relationship change under different educational, institutional and economic conditions? Overall, the analysis supports the view that FDI has a stronger positive impact on economic growth in countries with a higher level of education attainment, openness to international trade and stock market development, and a lower rate of population growth and lower level of risk. Thus, countries undertaking reform of cross-border capital restrictions and controls and initiating other policy aimed at encouraging FDI need to ensure that broader social policy objectives?such as education and institutional reform?are also undertaken to leverage the benefits from FDI.
Original languageEnglish
Pages (from-to)1621 - 1641
Number of pages21
JournalApplied Economics
Issue number13
Publication statusPublished - 2009
Externally publishedYes

Cite this