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The impact of foreign direct investment on urbanization in developing countries
Abstract
This study uses country level panel data covering 30 developing countries for the period 2005-2015 and employs the panel least squares to investigate empirically the impact of foreign direct investment on urbanization in selected countries. The study finds that foreign direct investment on average has played a significantly positive role in the development of selected countries urbanization. However, the impact of foreign direct investment on urbanization varies from country to country. The study has some policy implications. First, as the study finds that FDI contributes to the development of urbanization through contributing to economic growth and structural changes, employment creation and increased income, therefore, apart from improving local economic and technological conditions to attract more FDI inflows, developing countries should design policies to encourage FDI flows into the industries and regions in line with economy’s overall economic structural adjustment, industrial upgrading and regional economic development.
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