How Does Foreign Direct Investment Promote Economic Growth ? Exploring the Effects of Financial Markets on Linkages

@inproceedings{Sayek2006HowDF,
  title={How Does Foreign Direct Investment Promote Economic Growth ? Exploring the Effects of Financial Markets on Linkages},
  author={Laura Alfaro Areendam Chanda Sebnem Kalemli - Ozcan Seli Sayek},
  year={2006}
}
  • Laura Alfaro Areendam Chanda Sebnem Kalemli - Ozcan Seli Sayek
  • Published 2006
The empirical literature finds mixed evidence on the existence of positive productivity externalities in the host country generated by foreign multinational companies. We propose a mechanism that emphasizes the role of local financial markets in enabling foreign direct investment (FDI) to promote growth through backward linkages, shedding light on this empirical ambiguity. In a small open economy, final goods production is carried out by foreign and domestic firms, which compete for skilled… CONTINUE READING
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