Desarrollo afectivo en el niño

Over the past two decades, many country-specific and cross-country studies have examined the role of FDI in stimulating economic growth in less developed countries (LDCs). But the direction of causality remains an unresolved issue. There has been findings that support the notion that FDI has the tendency to promote economic growth. According to this view, FDI provides important ingredients that are

necessities for economic growth. By providing managerial skills, new production processes and techniques, as well as new varieties of capital goods, FDI invariably promotes economic growth of LDCs (Samad, 2009). Borensztein et al. (1998) found that FDI is a vital channel for the transfer of new technologies, contributing to growth in much more measures than domestic investment could possibly do. However, their result suggests that FDI contributes to growth if and when the host country attains a minimum threshold level of human capital. Blomstrom et al. (1992) found evidence to suggest that FDI Granger causes economic growth. However, FDI’s positive contribution is based on the condition that the host country attains a sufficiently high per capita income. De Mello (1997) also found that FDI had significantly positive effect on economic growth in the countries with high-income level. Caves (1996) encapsulates the positive effects of FDI as introduction of new processes, productivity gains, technology transfers, managerial skills and technical know-how in the domestic market, access to markets, employee training and international production networks. Jyun-Yi and Chih-Chiang (2008) used a GMM method, which specifies FDI to be endogenous and found an insignificantly negative relationship between FDI and growth. However, when they used threshold models, their result indicated that FDI can have a significantly positive impact on growth in countries which have attained relatively better levels of human-capital and initial output. Adams (2009) analyses the impact of FDI and domestic investment on economic growth in Sub-Saharan Africa for the period of 1990-2003 employing OLS and fixed effects estimation. Their results showed that both domestic investment and FDI are positive and significantly correlated with economic growth but found evidence of a net crowding out effect of FDI on domestic investment.

On another hand, some studies found that economic growth precedes FDI. According to this view, economic growth first provides the necessary and favourable economic factors upon which FDI will play a positive role for economic growth and development. For instance, the spillover effects of technological transfers through FDI can only be effective when the absorptive capacity of host countries is developed. In his argument, Zhang (2000) suggested that economic growth leads to FDI growth. Speedy economic growth in the host country increases total demand, which in turn stimulates higher demand for investments and by extension FDI. Other authors found a bidirectional link between FDI and growth, implying that FDI and economic growth are positively interdependent. Among the authors that found a bidirectional causal relationship are Caves (1996) and Chowdhry and Mavrotas

(2006). Caves (1996) found that robust economic growth provides high profit opportunities that attract higher domestic and foreign direct investments. Again, FDI through its spillover effects has direct positive impact on economic growth of the host countries. Chowdhry and Mavrotas (2006) found that in Chile, GDP causes FDI (and not vice versa) but found strong evidence of bi-directional causality between FDI and GDP in Malaysia and China. Within the context of South East Asia and Latin American countries, Samad (2009) also found evidence of both unidirectional causality flowing from GDP to FDI in some countries and bi-directional causality from GDP to FDI. Turkan and Yetkiner (2008) adopted a two-equation simultaneous GMM estimation method on several OECD countries, treating economic growth and FDI variables as endogenous. They found FDI growth and economic growth to significantly define each other. This means that they have a reinforcing relationship, which is endogenous in nature.

In similar vein as the above authors, they found that export growth and human- capital were statistically significant determinants of both FDI and economic growth. Jayachandran and Sellan (2010) explored the relationship that exists between trade, FDI and growth for India over period of 38-years from 1970. Their findings were unambiguously contradictory to those of both authors reviewed above which suggested that the direction of causality is unidirectional from exports to growth as well as unidirectional from FDI to growth. Therefore, for India, over the period, exports and FDI clearly caused economic growth. In the same vein, Asiedu (2002) suggested through her findings that FDI had different impact on different regions; particularly comparing Sub-Sahara Africa (SSA) countries and non-Sub-Sahara African (non-SSA) countries. She compared impacts based on access to relative distinctive features of high returns on investment and levels of infrastructural. She found that the impact of FDI were not reactive to such criteria in SSA countries when compared to more reaction to these thresholds for non-SSA countries. She then concludes that the marginal gains to openness are less successful to SSA countries in relative terms.

In the literature, we discovered another area that has gained attention and has been theoretically reviewed above. This is with regards to accounting for specific industrial or sectoral impacts when evaluating the impact of FDI. This approach evaluates FDI with specific impacts focus rather than generally with a superficial ‘neo-liberal’ notion

industry heterogeneity among 35 OECD countries, Eastern Europe and Asia over the period of 1987-2002, conducted an examination of sectoral FDI on productivity growth, while they controlled for the effect of developmental stages. They found that FDI has a much-pronounced impact on economic growth for emerging economies, which includes Eastern Europe and Eastern Asian emerging economies. Additionally, these FDI impacts also differed across industries, supporting claims that FDI policies should reflect various industrial abilities across countries. Again, Chakraborty and Nunnenkam (2008) conducted a study on post- reform India and controlled for the impacts of sectoral FDI and causality in a framework of cointegration-model. They found that the impacts of FDI were different across the different sectors and that the relationships that exists between FDI and growth varied across the different sectors. For example, they found no evidence of causal relationship between FDI stock and productivity in the primary sector; and an endogenous relationship in the manufacturing sector. Evidence was also found of inter-industry spillovers; one of such flows from services sector to industry sector. With regards to financial markets development, Alfaro et al. (2010), in their paper connecting FDI, financial markets and economic growth, found that countries that have comparatively more developed financial markets generally exhibited positive gains from FDI. They also suggested that analysing FDI impacts in isolation yields results with ambiguity.

Another area of attention is the increasing flow of additional financial resources besides FDI, such as immigrant remittances, from developed countries to developing countries and its potential impact on capital accumulation and economic development in receiving countries. Since remittances from immigrants represent a substantial inflow of financial resources, the role of this financial inflow in economic development is another important issue for research and policy making, albeit not for this study. A more recent study by Comes et al. (2018) examines the impact of FDI and remittances on economic growth using a panel of seven countries from Central Europe and Eastern Europe with a GDP per capita under $25,000. Their study found a positive impact of both FDI and remittances on GDP, but FDI had a higher influence in all analysed countries.

According to Samad (2009), an investigation of the causal link between FDI and economic growth has both policy and strategic implications for less developed countries (LDCs). FDI and economic growth may have a link in three possible ways:

(1) Causal link may flow from economic growth to FDI (unidirectional). If the causal link flows from economic growth to FDI, it implies that economic growth is a precondition for attracting, absorbing and sustaining FDI. In such instance, the policy implication is that LDCs must strive to develop and grow their economies, rather than chasing after FDI in futility (2) Causal link may flow from FDI to economic growth. Where there exists a unidirectional causality from FDI to economic growth, it lends credence to the view that FDI does not only lead to employment generation and capital formation but also economic growth of host countries. The policy implication in such scenario will mean that corporate rules and regulations of host countries must be addressed and enforced to attract FDI. (3) Causal relation may flow in both ways (bi-directional). If the causal link is bidirectional, it therefore means that economic growth and FDI have reinforcing effects on each other.

In conclusion, the evaluations on the empirical evidence for the impact of FDI on growth, which though appears to be prevalently questionable, have in recent times been supportive to the claim that the FDI-Growth nexus and its impacts are better understood haven controlled (or thresholding) for other important pre-determinants of growth and when analysed across different sectors of the economy. This idea is better understood in the following section.