Mechanisms to Explain FDI Impacts in Less Developed Countries Growth: The Case of the Industrial Development Level in Turkey, Egypt and Morocco

Main Article Content

Eric Mani Pierre


The industrial development level proposed in this essay is the key factor to explain how Foreign Direct Investment (FDI) impact may turn from positive to negative. It is shown that, the role of FDI inflows in host countries’ growth will be effective for those applying not only the right policies, but also raising their local aggregate industry level up from a certain threshold (without necessarily applying home country content policies). Interaction between industrial development level and FDI may also be considered to be the second and long term effect of the FDI on a country’s growth. Hence, when lacking or too weak, industrial development level may be crushed by FDI, turning the interaction from positively impacting on growth to play the malign role, and then explaining why in some countries FDI appear negatively related to local development.

Article Details



Adewimu, S. 2006. „The impact of FDI on growth in developing countries. an African experience.” Master thesis.
Bacic, K., Racic, D., and Ahec-Šonje, A. 2004. „The effect of FDI on recipient countries in Centraland Eastern Europe”. EIBA conference, December 2004. Page 1-21
Barry, F. 1999. „FDI and industrial structure in Ireland, Spain, Portugal, and the UK: some preliminary results”. Annual Conference on the European Economy, ISEG, Lisbon December 1999.
Barry, F., Görg, H., and McDowell, A. 2003. „Outward FDI and the Investment Development Path of a late industrializing economy: Evidence from Ireland.” Regional studies, 37(4): 341-349.
Baster, M., and Kouparitsas, A.M. „Trade structure, industrial structure, and international businesscycles.”
Beck, M., and Nickmehr, N.A. 2007. „The failed promise o f foreign direct investment: some remarks on malign investment and political instability in former Soviet states.” Working paper 33, White Rose Research Online
Bilgiç E. 2007 „Causal relationship between foreig n direct investment and economic growth in Turkey.”
Boreinsztein, E., De Gregorio, J., and Jong- W.L. 1995. “How does foreign direct investment affect economic growth?”. Working paper 5057 NBER.
Coughlin, C.C. (1992) „Foreign-owned companies in the United States: Malign or Benign?.”
Deniz, Z., and Dogruel, S. 2008. „Desagregated education data and growth: some facts from Turkey and MENA countries”.,
Jel classification J24, O43.
Dunning, J.H. 1988. Explaining international production. p. 1-51.
Duyster, N., and Patterson, S. 2009. „Foreign Direct Investment absorptive capacity”;jsessionid=A514B1099FE67A027DAEE69A39DC003F.smart1?sequence=1.
Fonseca, M., Mendonça, A., and Passos, J. 2007. „The investment development path hypothesis: evidence from the Portuguese case – A panel data a nalysis.” WP 021/2007/DE.
Gbakou, M.B.P., Jallab, M.S., Sandretto, R. 2008. „Foreign direct investments, macroeconomic instability and economic growth in MENA countries.”Centre national de la recherche scientifique Working Paper 08-17.
Hisarciciklilar, M., Kayam, S.S., Kayalic,a M.O., and Ozkale, N.L. „Foreign Direct Investment and economic growth in Mediterranean countries”.
Hossain, M.A. 2005. „Impact of direct investment in Bangladesh’s balance of Payments:some policies implications” PN 0805.
Johansson, H., and Söderholm P. 2008 „A study of the FDI on growth, the case of Turkey”
Llhan, O, and Huseyin, K. 2007. „Foreign direct investment and growth: an empirical investigation based on cross-country comparison.” Economia Internazionale, 60(1): 75-82.
Luo, Y., and Tan, J.J. 1997. „How much does industry str ucture impact foreign direct investment in China?.” International Business Review, 6(4): 337-359.
Mainguy, C. 2004. “l’impact des investissements directs étrangers surles économies en développement.” Revue Région et développement, 20.
Mani, P.E. 2007. Délocalisations et investissements étrangers de proximités, le cas des entreprises européennes en Hongrie, République Tchèque et Pologne. Master’s thesis. CEMAFI, University of Nice Sophia-Antipolis.
Marino, A. 2000. „The impact of FDI on developing countries growth: Trade policy matters”. National institute of statistic, Italy. CEMAFI, University of Nice Sophia-Antipolis
Mencinger, J. (2005) „Does foreign direct investment always enhance economic growth?.” Kyklos, 56-2003- Fasc. 4 491-508.
Mold, A. 2004. „FDI and poverty reduction: a critical reappraisal of the arguments.” Revue Région
et Développement, 20.
Moran, T.H. 1998. Foreign Direct Investment and Development. Chapter 1, 2 & 3. Institute for International Economics.
Nilsson, J. 2008 „FDI and economic growth-can we expect FDI to have a positive impact on the economic growth of Sub-Saharan Africa”
OECD Investment review. 2010. „The role of Foreign Direct Investment in Morocco’s EconomicDevelopment.”
Qiu L.D., and Wu, C. 2001. „Development of foreign direct investment and evolution of industrial structure: Case of Hong Kong.”
Reeve, A.T. 2002 „Factors endowment and industrial structure” FBR International Finance”. Discussion paper 731.
Sahoo, P. 2006 „Foreign direct investment in South Asia: policy, trends, impact and determinants.” ADB Institut discussion paper 56.
Tambunan, T. 2004 „The impact of foreign direct investment on Poverty reduction. A survey of literature and a temporary finding from Indonesia”. Faculty of Economics,University of Trisatki, Indonesia, 2004 Tusad, Yased (2004) „FDI attractiveness of Turkey, a comparative analysis.”
Unité de recherché 047 de l’IRD. 2006. “Institutions et impact des IDE dans les pays en développement le secteur de la grande distributionau Mexique”. 7 et 8 septembre.
Wan, X. 2010. „A literature review on the relationship between foreign direct investment and Economic growth.” International Business Research, 3(1).
World Investment Report 1999, Foreign Direct Investment and the Challenge of Development.
Yanikkaya, H. 2003. „Trade openness and economic growth: a cross-country empirical investigation.” Journal of Development economics, 72(2003): 57-89.