FOREIGN DIRECT INVESTMENTS AND ECONOMIC GROWTH: A CRITICAL LITERATURE REVIEW

The relationship between foreign direct investment (FDI) and economic growth has attracted major attention from academics the governments of developing countries. Since is one their main focuses, FDI attraction-related policies have been prioritized during process development in these It widely observed that mitigates saving-investment imbalance provides technology which used for production goods services. Although some studies found evidence positive impact on growth, others revealed opposite result. objective this paper was to perform a critical theoretical empirical literature review investments growth. theories guiding study included internalization theory, eclectic paradigm product lifecycle Solow model endogenous theory. From reviewed, most conclude influence way but it also evident provide conflicting findings with oscillating negative indicating no at all. difference among scholars might arise methodological differences operationalization variables. Contextual explain inconsistent as focused economies. identified preconditions host country help harness they include developed financial legal institutions, proper infrastructure, conducive monetary fiscal policies, an enabling macro-economic structural environment directs productive investments.