Does FDI promote Economic Growth and Development? Evidence from Latin America and Africa
This paper is an attempt to analyse and empirically estimate the impact of FDI on economic growth and human development of Africa and Latin American countries for the period 1985â€“2011. To this end we develop two equations: growth and human development. Our findings, based on fixed effect panel regression, thus, suggest that FDI does not have a positive impact on economic growth but it has significant positive impact on human development. We conclude that for FDI to be a noteworthy provider to economic growth, it is important to increase absorption capacity by improving the level of democracy, increasing and improving transport infrastructure and following appropriate economic policies. Our results are found to be robust across approach, model specifications and statistical test.
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