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The General Causes of Foreign Direct Investments


the General Causes of Foreign Direct Investments

generally of limited importance for exploration and extraction activities. In a typical model of technology diffusion, the rate of economic growth of a backward country depends on the extent of adoption and implementation of new technologies that are already in use in leading countries. This is done through a direct effect of upgraded skill level of the workforce, as well as via indirect effects such as improved socio-political stability and health (unesco and oecd, 2003, world bank, 2003). Inflows are the net inward transactions of FDI (inward investments minus dis-investments) in the resident or the country in which it is reported. The impact of FDI on economic growth of recipient country has been one of varying opinions among authors. This research was driven by the following questions: Has foreign direct investment into Nigerian oil and gas sector brought about economic development? For example, even the report produced by Oxfam America (Ross, 2001) which is strongly negative towards such projects, states There are exceptions: some states with large extractive industries like Botswana, Chile and Malaysia have overcome many of the obstacles and implemented sound pro-poor strategies. This may simply reflect the fact that there are fewer firms to acquire in developing nations (Hill, 2009).

The data on FDI are taken from World Bank Data 23 source whereas data on GDP, gfcf and GDP are collected from Hand Book of Pakistan Economy 24, published by State Bank of Pakistan. Growth is a necessary ingredient applauded to bring about reduction in poverty. The remainder of the paper is as follows. The above point shows the complementary effect of FDI on domestic firms. 3.3 Theoretical and Empirical Review of Literature.3.1 The FDI - Growth Linkages Foreign direct investment has been widely acclaimed as a key ingredient of successful economic growth and development in developing countries partly death Penalty, Why Its Bad because the very essence of economic development is the rapid and. Hence requires huge capital and ability to manage high risk (Vernon, 1971). Other studies, characterized by Feder (1983 Balassa (1985 Ram (1987) and Ukpolo (1994) find support for ELG based upon growth and output regressions drawn from a growth accounting framework. It has witnessed spectacularly failed economic policies with GDP no higher than it was forty years ago. Dominance of global economy, there have always been exceptions which have become more common in recent years.


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