On the welfare effects of foreign investment
Modern growth theory emphasizes endogenous technological change as the engine of growth. A policy implication for developing countries that has been drawn from this theory is that foreign direct investment increases growth. However, welfare assessments must recognize that investment returns may be r...
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| Veröffentlicht in: | Journal of international economics 2001-08, Vol.54 (2), p.411-427 |
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| container_end_page | 427 |
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| container_title | Journal of international economics |
| container_volume | 54 |
| creator | Reis, Ana Balcão |
| description | Modern growth theory emphasizes endogenous technological change as the engine of growth. A policy implication for developing countries that has been drawn from this theory is that foreign direct investment increases growth. However, welfare assessments must recognize that investment returns may be repatriated. In this paper we show that foreign investment may decrease national welfare due to the transfer of capital returns to foreigners. Taking into account all the relevant effects, we show that welfare does not change monotonously with FDI and we characterize the conditions that imply a positive or a negative welfare effect of foreign investment. |
| doi_str_mv | 10.1016/S0022-1996(00)00100-8 |
| format | Article |
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| fulltext | fulltext |
| identifier | ISSN: 0022-1996 |
| ispartof | Journal of international economics, 2001-08, Vol.54 (2), p.411-427 |
| issn | 0022-1996 1873-0353 |
| language | eng |
| recordid | cdi_proquest_miscellaneous_38270792 |
| source | RePEc; Elsevier ScienceDirect Journals Complete |
| subjects | Developing countries Economic growth Economic theory Endogenous growth Foreign direct investment Foreign investment Growth theory Social welfare Studies Technological change Transfer of profits Welfare economics |
| title | On the welfare effects of foreign investment |
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