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Shock-Therapy vs. Gradualism : The Effectiveness of Foreign Direct Investment in Transitioning Economies

<p>Throughout the latter half of the 20<sup>th</sup> century, many developing economies adopted a set of economic policies in order to transition to market economy. Reforms were introduced either simultaneously or gradually, fuelling the debate over whether the so-called shock-therapy reforms were more beneficial or less beneficial to growth than gradual reforms. This study focuses on the role of the mode of transition in determining the effectiveness of Foreign Direct Investment (FDI) on the growth of the Gross Domestic Product (GDP). FDI is valuable for development in transition economies since it has often been a main source of investment for these types of economies. An empirical analysis was conducted using sixty transitioning countries, examining the growth up to sixteen years after the initial reform. The results indicate that there is some evidence of a difference in the effects of FDI inflows on GDP growth between the shock-therapy and gradual reformers.</p>

Identiferoai:union.ndltd.org:UPSALLA/oai:DiVA.org:hj-11618
Date January 2010
CreatorsToro, Stephanie, de León Mazariegos, María José
PublisherJönköping University, JIBS, Economics, Jönköping University, JIBS, Economics
Source SetsDiVA Archive at Upsalla University
LanguageEnglish
Detected LanguageEnglish
TypeStudent thesis, text

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