Revisiting the Foreign Direct Investment and Economic Growth Nexus: Empirical Evidence from Developing Economies

Mark Oliver Erbynn Baidoo

Diplomová práce

Abstract:

This thesis analyses the relationship between foreign direct investment (FDI) and economic growth in developing countries by considering the moderating effects of institutional quality, human capital, and technological readiness. Using panel data from over 120 countries spanning the period 2000 to 2024 and the System Generalized Method of Moments (GMM) estimator to effectively address potential endogeneity concerns while capturing the dynamic interplay over time. The results demonstrate that FDI is positively associated with economic growth. Institutional quality negatively moderates the relationship between FDI and economic growth. The result further proves that human capital positively moderates the relationship between FDI and economic growth. Finally, technological readiness moderates FDI's impact such that lower levels of technological readiness curtail short-term benefits while bolstering long-term economic growth driven by FDI, indicating that countries with higher technological readiness can better leverage FDI for sustainable development.

Abstract:

This thesis analyses the relationship between foreign direct investment (FDI) and economic growth in developing countries by considering the moderating effects of institutional quality, human capital, and technological readiness. Using panel data from over 120 countries spanning the period 2000 to 2024 and the System Generalized Method of Moments (GMM) estimator to effectively address potential endogeneity concerns while capturing the dynamic interplay over time. The results demonstrate that FDI is positively associated with economic growth. Institutional quality negatively moderates the relationship between FDI and economic growth. The result further proves that human capital positively moderates the relationship between FDI and economic growth. Finally, technological readiness moderates FDI's impact such that lower levels of technological readiness curtail short-term benefits while bolstering long-term economic growth driven by FDI, indicating that countries with higher technological readiness can better leverage FDI for sustainable development.

Keywords

Keywords, foreign direct investment (FDI), economic growth, institutional quality, human capital, technological readiness, System GMM, developing countries.

Jazyk práce: angličtina

Datum vytvoření / odevzdání či podání práce: 27. 4. 2026

Obhajoba závěrečné práce

• Obhajoba proběhla 1. 6. 2026
• Vedoucí: Samuel Amponsah Odei, Ph.D.

UNIVERZITA HRADEC KRÁLOVÉ

Fakulta informatiky a managementu

Magisterský studijní program / obor:
Economics and Management / Economics and Management