FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH NEXUS: AN ENDOGENOUS PERSPECTIVE
DOI:
https://doi.org/10.5281/zenodo.20107543Abstract
This thesis provides a comprehensive theoretical analysis of the relationship between foreign direct investment (FDI) and economic growth within the framework of endogenous growth theory. The relevance of the study arises from the increasing importance of international capital flows as a driver of long-term economic development and structural transformation in the globalized economy. The primary objective is to examine the economic essence of FDI and to substantiate its role in promoting sustained economic growth through internal mechanisms such as innovation, human capital accumulation, and technological progress.
The research is grounded in modern theoretical approaches, including endogenous growth models, international production theory, and new economic geography. It explores the channels through which FDI contributes to productivity enhancement, knowledge spillovers, and efficiency gains, while also analyzing the conditions under which these effects are maximized. Particular attention is given to the role of absorptive capacity, institutional development, and innovation systems in mediating the FDI–growth relationship.
The findings suggest that FDI acts as a catalyst for economic growth by facilitating technology transfer, enhancing human capital, and stimulating innovation-driven development. However, its impact is conditional upon the structural characteristics of the host economy. It is concluded that strengthening domestic capabilities and fostering an innovation-oriented environment are essential for ensuring that FDI contributes effectively to long-term and sustainable economic growth.
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