Governments often promote inward foreign investment to encourage technology 'spillovers' from foreign to domestic firms. Using panel data on Venezuelan plants, the authors find that foreign equity participation is positively correlated with plant productivity (the 'own-plant' effect), but this relationship is only robust for small enterprises. They then test for spillovers from joint ventures to plants with no foreign investment. Foreign investment negatively affects the productivity of domestically owned plants. The net impact of foreign investment, taking into account these two offsetting effects, is quite small. The gains from foreign investment appear to be entirely captured by joint ventures.

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Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela

The study develops an index of globalization covering its three main dimensions: economic integration, social integration, and political integration. Using panel data for 123 countries in 1970–2000 it is analysed empirically whether the overall index of globalization as well as sub-indexes constructed to measure the single dimensions affect economic growth. As the results show, globalization indeed promotes growth. The dimensions most robustly related with growth refer to actual economic flows and restrictions in developed countries. Although less robustly, information flows also promote growth whereas political integration has no effect.

/pdf/does-globalization-affect-growth-evidence-from-a-new-index-4vsnrtsy3u.pdf

Does Globalization Affect Growth? : evidence from a new Index of Globalization

A detailed review of the education sector in Australia as in the data provided by the 2006 edition of the OECD's annual publication, 'Education at a Glance' is presented. While the data has shown that in almost all OECD countries educational attainment levels are on the rise, with countries showing impressive gains in university qualifications, it also reveals that a large of share of young people still do not complete secondary school, which remains a baseline for successful entry into the labour market.

/pdf/education-at-a-glance-m5vl7o68j5.pdf

Education at a Glance

This paper uses new statistical techniques and two new databases to reassess the relationship between ,, , , , () ' −= − + + +

/pdf/does-foreign-direct-investment-accelerate-economic-growth-27mjs5uxhg.pdf

Does Foreign Direct Investment Accelerate Economic Growth

The recent wave of financial globalization since the mid-1980s has been marked by a surge in capital flows among industrial countries and, more notably, between industrial and developing countries. While these capital flows have been associated with high growth rates in some developing countries, a number of countries have experienced periodic collapse in growth rates and significant financial crises over the same period, crises that have exacted a serious toll in terms of macroeconomic and social costs. As a result, an intense debate has emerged in both academic and policy circles on the effects of financial integration for developing economies. But much of the debate has been based on only casual and limited empirical evidence.

/pdf/effects-of-financial-globalization-on-developing-countries-4fgndpscel.pdf

Effects of Financial Globalization on Developing Countries: Some Empirical Evidence

This paper examines the role financial markets play in the relationship between foreign direct investment (FDI) and economic development. We model an economy with a continuum of agents indexed by their level of ability. Agents can either work for the foreign company or undertake entrepreneurial activities, which are subject to a fixed cost. Better financial markets allow agents to take advantage of knowledge spillovers from FDI, magnifying the output effects of FDI. Empirically, we show that well-developed financial markets allow significant gains from FDI, while FDI alone plays an ambiguous role in contributing to development.

https://www.imf.org/-/media/Websites/IMF/imported-full-text-pdf/external/pubs/ft/wp/2003/_wp03186.ashx

FDI Spillovers, Financial Markets, and Economic Development

Standard economic indicators suggest that the USA experienced long-run economic growth throughout the nineteenth century. However, biological indicators, including human stature, offer a different picture, rising early in the century, falling (on average) mid-century, and rising again at the end of the century. This pattern varied across geographical regions. Using a unique data set, consisting of mean adult stature by state, we test for convergence in stature among states in the nineteenth century. We find that during the period of declining mean stature (1820–1870), heights actually diverged. Later in the century (1870–1890) we find a type of “negative” convergence indicating that stature among states tended to converge to a new, lower steady state. Only towards the end of the century (1880–1900) do we find classic convergence behavior. We argue that the diversity of economic experiences across regions, including urbanization, industrialization, and transportation improvements, explain this pattern of divergence and then convergence.

Convergence (and divergence) in the biological standard of living in the USA, 1820–1900

Shedding light on regional growth and convergence in India

It may be no coincidence that those countries that grew most rapidly in the late twentieth centuryâ€”including South Korea, China, and, of late, Indiaâ€”were relatively developed civilizations when Western Europe began its overseas expansion five centuries ago In this article the authors explore the literature showing that institutions matter to growth, then examine new evidence that the â€˜social capabilityâ€™ to achieve growth is a function of capacities that go beyond the formal education system Remarkably, a long history of nationhood at the time of Columbus means better odds of growth today

Areendam Chanda

Papers

FDI Spillovers, Financial Markets, and Economic Development

Convergence (and divergence) in the biological standard of living in the USA, 1820–1900

Shedding light on regional growth and convergence in India

The Quest for Development

The rise in returns to education and the decline in household savings