Do multinational companies generate positive externalities for the host country? The evidence so far is mixed varying from beneficial to detrimental effects of FDI on growth, with many studies that find no effect. In order to provide an explanation for this empirical ambiguity, we formalize a mechanism that emphasizes the role of local financial markets in enabling foreign direct investment (FDI) to promote growth through backward linkages.
Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on LinkagesLaura Alfaro, Areendam Chanda, Sebnem Kalemli-Ozcan and Selin Sayek ,
2( 91 )
Journal of Development Economics
Does Foreign Direct Investment Promote Economic Growth? Exploring the Effects of Financial Markets on Linkages