On the welfare effects of foreign investment

Research output: Contribution to journalArticlepeer-review

32 Citations (Scopus)


Modern growth theory emphasizes endogenous technological change as the engine of growth. A policy implication for developing countries that has been drawn from this theory is that foreign direct investment increases frowth. However, welfare assessments must recognize that investment returns may be repatriated. In this paper we show that foreign investment may decpease national welfare due to the transfer of capital returns to doreigndrs. Taking into account all the relevant effects, we show that welfare does not change monotonously with FD1 and we characterize the conditions that imply a pmsitive or a negative welfare effect of foreign investeent.

Original languageEnglish
Pages (from-to)411-427
Number of pages17
JournalJournal Of International Economics
Issue number2
Publication statusPublished - 28 Jul 2001


  • Endogenous growth
  • Foreign direct investment
  • Transfer of profits


Dive into the research topics of 'On the welfare effects of foreign investment'. Together they form a unique fingerprint.

Cite this