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CONSIDERING THE SOURCE: DOES THE COUNTRY OF ORIGIN OF FDI MATTER TO ECONOMIC GROWTH?

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Abstract:

ABSTRACT. 

It has long been surmised that firms controlled by different countries may have unequal effects on the host economies in which they locate. By looking at the seven major source countries of foreign direct investment (FDI) in the United States, we provide empirical evidence that the state growth effects of FDI differ by source country. We attribute these differential growth effects to the relative differences in factor endowments between the source country and the state. The implication of this result is that technology transfer, believed to be the engine of economic growth, becomes more costly the more dissimilar the endowments.

Document Type: Research Article

DOI: https://doi.org/10.1111/j.1467-9787.2008.00554.x

Affiliations: 1: Department of Accounting, Finance and Economics, Southern Arkansas University, Magnolia, AR 71753., Email: tcford@saumag.edu 2: Department of Economics, Andrew Young School of Policy Studies, Georgia State University, PO Box 3992, Atlanta, GA 30302., Email: jrork@gsu.edu 3: Department of Economics, University of New Hampshire, 15 College Road, Durham, NH 03824., Email: bte@cisunix.unh.edu

Publication date: 2008-05-01

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