Does the level of development distinguish the impacts of foreign direct investment on the stages of human development?

Abstract

This paper assessed the impact of foreign direct investment (FDI) on the stages of human development (HD) using panel data from 87 developing, 13 transition and 34 developed countries from 1990 to 2019. Foreign direct investment positively influenced human development in developing countries. However, the effect was neutral for transition and developed countries. Regarding the effect of FDI on the stages of HD, except for low human development in developing countries, all the computed effects were positive. Failure to delineate the effects of FDI on HDI into stages of HD would result in inaccurate results leading to inappropriate policy responses. Generally, FDI can be promoted in countries within the stages of human development. Whilst similar policies may be relevant, the extent of the outcomes would differ.

Keywords

• F63
• O14
• O15
• O19