The Impact of Foreign Direct Investment on Economic Growth in Developing Countries

Thesis Abstract

Abstract
Foreign Direct Investment (FDI) has been recognized as a significant driver of economic growth in developing countries. This thesis investigates the impact of FDI on economic growth in developing countries, focusing on the various channels through which FDI influences economic development. The study employs a mixed-methods approach, combining quantitative analysis with qualitative insights to provide a comprehensive understanding of the relationship between FDI and economic growth. The research begins with an exploration of the theoretical framework underpinning the link between FDI and economic growth. Various theories, including the neoclassical growth model, endogenous growth theory, and the resource-based view, are reviewed to establish a conceptual foundation for the study. This is followed by a detailed examination of the empirical literature on FDI and economic growth, highlighting key findings and methodologies employed in previous studies. The methodology chapter outlines the research design, data sources, and analytical techniques used in the study. A panel data analysis is conducted to examine the relationship between FDI inflows and economic growth in a sample of developing countries over a specified period. Qualitative interviews with key stakeholders in selected developing countries provide additional insights into the mechanisms through which FDI impacts economic growth. The findings chapter presents the empirical results of the analysis, shedding light on the significance and direction of the relationship between FDI and economic growth in developing countries. The study identifies various channels through which FDI influences economic development, including technology transfer, human capital development, and productivity enhancement. The role of government policies and institutional factors in mediating the FDI-economic growth nexus is also explored. The discussion chapter critically evaluates the implications of the findings and offers policy recommendations for maximizing the positive impact of FDI on economic growth in developing countries. The study underscores the importance of creating an enabling environment for FDI inflows through sound macroeconomic policies, investment promotion strategies, and institutional reforms. It also highlights the need for developing countries to leverage FDI for sustainable and inclusive economic growth. In conclusion, this thesis contributes to the existing body of knowledge on the impact of FDI on economic growth in developing countries. By integrating quantitative analysis with qualitative insights, the study provides a holistic understanding of the complex relationship between FDI inflows and economic development. The findings offer valuable insights for policymakers, investors, and other stakeholders seeking to harness the potential benefits of FDI for promoting sustainable economic growth in developing countries.