The Study of Foreign Direct Investment on Economic Growth (A Comparative Analysis of Developed and Developing Countries)

The purpose of this study is to investigate the effect of the economic variables on the growth of selected developing and developed countries. For comparing the effect of the variables on the economic growth in the mentioned countries, a the period of 1990-2006 is selected. In order to do this, we extracted data from WDI software Panel data econometric method is used. The results show that net capital in developing countries has a positive and significant effect on the gross domestic product of the developing countries with the coefficient of 0.41 and “degree of freedom” 0.19. Other findings show that FDI in developing countries has a negative impact on economic growth and for developed countries it is positive. Also, in developed countries elasticity coefficient of labor force is very high and it implies that productivity of labor force in the production process is so high.