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

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: (1) is there evidence of a positive relationship between foreign direct investment and national growth? and (2) 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.