FDI Flows to Low-Income Countries Global Drivers and Growth Implications

What accounts for variations in FDI flows from advanced to developing countries? How have FDI inflows explained cross-country growth experiences? In this paper we tackle both these questions empirically for a large sample of middle and low-income countries. Two key results emerge: (i) lower borrowin...

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Bibliographic Details
Corporate Author: International Monetary Fund
Format: eBook
Language:English
Published: Washington, D.C. International Monetary Fund 2010
Series:IMF Working Papers
Subjects:
Online Access:
Collection: International Monetary Fund - Collection details see MPG.ReNa
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653 |a Interest rates 
653 |a Investments, Foreign 
653 |a Finance 
653 |a International Trade Organizations 
653 |a Real interest rates 
653 |a Trade Policy 
653 |a Long-term Capital Movements 
653 |a Exports and Imports 
653 |a Plurilateral trade 
653 |a General Financial Markets: General (includes Measurement and Data) 
653 |a International economics 
653 |a International trade 
653 |a Emerging and frontier financial markets 
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653 |a Financial sector development 
653 |a Interest Rates: Determination, Term Structure, and Effects 
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520 |a What accounts for variations in FDI flows from advanced to developing countries? How have FDI inflows explained cross-country growth experiences? In this paper we tackle both these questions empirically for a large sample of middle and low-income countries. Two key results emerge: (i) lower borrowing costs and positive real-side external factors were increasingly important drivers of FDI outflows to low-income countries in the pre-crisis period; (ii) economic fundamentals, the strength of economic reforms, and commitment to macroeconomic discipline are crucial determinants of the growth dividends of FDI. Our paper suggests that low-income countries can turn to domestic policy solutions to mitigate the adverse effects of a potential decline in FDI in the post-crisis world