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Fdi And Human Development Case Study

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This part discusses the specifications of model to investigate the correlation between FDI and human development. Based on the Sharma and Gani (2014) paper as a basic guideline as well as many previous theoretical and empirical studies, an empirical model is built to estimate any role of FDI in affecting human development. Therefore, this study specifies the general model as follows: HDIit = αit + β1FDIGDPit + β2Aidit + β3Tradeit + β4Govit + β5Ruleit + εit where HDIit indicates human development index in country i at time t, FDIGDPit stands for foreign direct investment as a share of GDP in country i at time t, Aidit, Tradeit represent net ODA received and trade in country i and time t respectively while …show more content…
The above findings have many diverse results, nevertheless, most empirical research show that FDI has a positive effect on human development. However, according to Sharma and Gani (2004, p.6), “…human development is a complex process, and it would be rash to say that FDI alone accounts for most of the variations in human development across countries of the world”. Under the trade and financial flows dimension (HDR, 2017), there are not only FDI but also ODA or trade openness listed to make their impacts on human development. Therefore, they should be chosen as control variables in this study’s panel linear …show more content…
Lin Moe found that ODA has a significant positive relationship with human development. Not only ODA, FDI and real GDP have the same relationships with human development. Besides, this study also showed that there still have gaps in the human development dimensions: income, health and education with and within countries. Another study written by Ankinkugbe and Yinusa (2009) analyzed the association between ODA and human development in sub-Saharan Africa by panel data method. In this study, they chose technical cooperation as an important and significant component of ODA flows. Their findings reflected mixed results of technical assistance on human development in Africa. Nevertheless, if observing under studying or teaching at primary and secondary schools, any technical support, the quality of instructions as well as infrastructure development really make positive contribution to Africa’s human development. It is obvious that there still have many diverse findings about the benefits of ODA to human development but in this thesis, it will assume that ODA is positively associating with human

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