Abstract
Purpose: This study is carried out to study the relationship between FDI and economic growth of developing countries. Approach/ Methodology/ Design: The study used data from 2000 to 2019 for 113 developing and transition countries. The study used Hausman fixed effect and instrumental variables two stage least square region to trace the results. Findings: The result of the study found a positive relationship between FDI and economic growth. An increase in FDI inflow will result and upsurge in economic growth of developing country. The relationship between unemployment and economic growth is found negative. The overall results show that FDI and economic growth has a positive relationship in developing countries. Practical Implication: This study used annual data of pre pandemic. It is concluded in the study that future studies have to check the impact in post pandemic scenario. Originality/Value: Though the relationship between FDI and economic growth is studied widely in different studies. As mentioned that COVID-19 pandemic changed the world economic situation there is much more aspects of FDI and economic growth is remaining to study. The issue of FDI and economic growth for a cluster of 113 countries is addressed in this study.
Highlights
IntroductionThe most significant question in the study is growth
Why are people in richer countries richer than others? Or why are some countries richer than others? The most significant question in the study is growth
This study examined to check the role of inward FDI in developing countries' economic growth
Summary
The most significant question in the study is growth. Growth related studies answers such questions by developing models through numerical data. GDP per capita is declared a crucial indicator of economic growth in different growth studies and theories. Romer (1994) emphasizes on living standard as a portion of his initial incentive for endogenous growth models. Several models have been developed to describe the motionless living standard of thousands of years ago to the new economic growth era. Kaldor (1961)Described the stylized growth facts as the stability of GDP shares paid to labour and capital. Some countries in the Foreign direct investment is considered as a catalyst for economic growth. FDI contributes to economic growth by increasing capital flow, employment creation, increase in exports and technology transfer. The world output is declined, world unemployment level increased the overall economic circle is disturbed
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