Good or bad? The influence of FDI on productivity growth. An industry-level analysis

This paper attempts to reconcile the often inconclusive evidence on the role of FDI in the process of economic development by taking into account the heterogeneity both among industries and among countries. Using a comparable database at the industry level for 35 countries in the OECD, Asia and Eastern Europe from 1987 to 2002, we test for the influence of both stage of development and sectoral FDI patterns in the relationship between FDI and productivity growth. In certain industries and for the catching-up countries, a significant and positive relationship emerges when FDI coincides with high investment or export orientation.