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The Effects of Foreign Investment on Overall and Sectoral Growth in Third World States
John M. Rothgeb, Jr.
Journal of Peace Research
Vol. 21, No. 1 (Apr., 1984), pp. 5-15
Published by: Sage Publications, Ltd.
Stable URL: http://www.jstor.org/stable/424449
Page Count: 11
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This research examines the impact of flows and stocks of foreign investment on growth in Third World countries. Overall growth in GDP per capita and in agriculture, manufacturing, transportation and communications, and domestic trade are investigated. In addition to foreign investment, variables relating to domestic investment, population, and wealth are included in the analysis. The results indicate that stocks of foreign investment have a negative long-term effect on overall growth, while flows have a short-run positive effect. The variable with the single greatest impact on overall growth, however, is growth in domestic investment. The sectoral results indicate that foreign investment is positively related to growth in all sectors. The pattern of the findings, however, suggests that foreign investment has an initial disruptive effect on the economies of non-American underdeveloped states.
Journal of Peace Research © 1984 Sage Publications, Ltd.