The Effect of Foreign Direct Investment on Aggregate Economy Demand

Subject Areas : Futurology

S . M . Seyyed Noorani ^{1 *}

1 - ندارد

Received: 2015-02-22 Accepted : 2015-02-22 Published : 2000-02-20

Keywords:

Abstract :

Foreign direct investment has been a key topic in development literature for a long time. Many economists have written articles on the on recipient’s macroeconomic variables, transfer of capital and technology. The improvement of managerial and human resources, promotion of foreign trade with its emphasized role on economic growth of recipients. Other economists have an opposite view. They have been emphasizing the negative effects of foreign direct investment on recipients. For example, transfer of natural raw materials to developed countries with low prices, increase in dependency to developed countries, worsening of living standards. In the article, we analyse foreign direct investment and its effect on aggregate demand in Indonesia, Thailand, Singapore and Malaysia. Our finding stuggest that this effect in each of the four countries depends on the development strategy chosen by each country. The export promotion strategy followed by them is the main reason for positive effect of foreign direct investment on their growth.