How Does FDI Affect Economic Growth?
Jul 23, 2025
21:56:46
The article titled “How Does FDI Affect Economic Growth? A Comparative Study Across Country Groups by Level of Development”, conducted by Dr Dong Manh Cuong and colleagues, was published in a Q2-ranked academic journal in December 2024.
The study analyses the impact of Foreign Direct Investment (FDI) on economic growth across 138 countries with varying levels of development over the period 2002 – 2019. Using an IV-2SLS model with fixed effects, the authors demonstrate that FDI has a positive effect on economic growth; however, the magnitude of this impact varies significantly between different country groups.
The findings reveal an inverted U-shaped relationship, in which developing countries benefit the most from FDI, followed by less developed countries, while developed economies experience the least impact. This suggests that developing nations have the opportunity to close the gap with advanced economies, whereas less developed countries may risk falling further behind unless appropriate policies are implemented to leverage FDI effectively in the context of globalisation.
Read more about the paper here.
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