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March/April 2009, 
Vol. 91, No. 2
Posted 2009-03-02

Foreign Direct Investment, Productivity, and Country Growth: An Overview

by Silvio Contessi and Ariel Weinberger

The authors review the empirical literature that studies the relationship between foreign direct investment, productivity, and growth using aggregate data and focus on two questions: Is there evidence of a positive relationship between foreign direct investment and national growth? And does the output of the “multinational sectors” exhibit higher labor productivity? The authors also briefly discuss how the microeconomic evidence and a number of aggregation and composition problems might help explain the ambiguous results in this literature.