THE PATTERN OF DIRECT FOREIGN-INVESTMENT AND ECONOMIC-GROWTH

This paper examines the relationship between the sectoral pattern of d irect foreign investment (DFI) and growth using theoretical and empiri cal analysis. The theoretical analysis suggests that different pattern s of DFI-because of their differential effects on the North-South term s of trade and on Southern technological development-can be expected t o affect growth in host countries differently. The empirical analysis using crosscountry growth equations, however, is unable to detect any effects of the pattern of DFI on growth. It is argued that detailed ca se studies of particular countries would be valuable for exploring the empirical issues involved. (C) 1997 Elsevier Science Ltd. All rights reserved.