Date

2014

Document Type

Thesis

Degree

Master of Arts

Department

Sociology

First Adviser

Austin, Kelly

Abstract

Debate upon the effect of foreign investment dependency on economic growth has been lasting for 40 years. Modernization theory upholds the positive effect of foreign investment. However, world-systems theory posits the development of the core relies on underdevelopment in the periphery. This theory breaks the fantasy of development and prompts cruel facts to challenge the modernization theory. The current research continues the previous studies of foreign investment dependency and economic growth. After controlling the effect of export dependency, population growth, urbanization and female labor participation, the current research finds that the effect of foreign investment dependency diverges across development level groups. For lower-developed countries, foreign investment demonstrates a negative effect on economic performance, but a positive one in rapidly developing countries. This divergent effect opens a window on the universe of world-systems research and encourages future research to focus on variation of foreign investment's effect across different development levels as well as its source, composition and target industries.

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Sociology Commons

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