Financial-sector foreign direct investment and host countries: new and old lessons

No 183, Staff Reports from Federal Reserve Bank of New York

Abstract: Many of the lessons from foreign direct investment (FDI) research on manufacturing and extractive resource industries are applicable to FDI research on the financial sector. This paper summarizes the main findings and policy themes of FDI research, with a primary focus on the implications of FDI for host countries, especially emerging market economies. I review evidence of technology transfers, productivity spillovers, wage effects, macroeconomic growth, and fiscal and tax concerns. Throughout this paper, I stress that parallel findings often arise from studies of general FDI and studies of financial-sector FDI. I also emphasize important differences between the effects of FDI in these sectors, especially with regard to local institution building and business cycles. These differences-more so than the similarities-should be the focus of research efforts.

Keywords: economic development; financial services industry; technology; foreign investments (search for similar items in EconPapers)
JEL-codes: F3 F4 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2004-04-01
New Economics Papers: this item is included in nep-fin, nep-ifn and nep-mfd
Note: For a published version of this report, see Linda S. Goldberg, "Financial Sector FDI and Host Countries: New and Old Lessons," Federal Reserve Bank of New York Economic Policy Review 13, no. 1 (March 2007): 1-17.
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