FDI, natural resource and economic growth: A Threshold model approach

In this article, we present analyses of the link between natural resources, FDI, and economic growth. We use the Fixed Effect Threshold Model for panel data with annual frequency for 83 countries. Our results show that FDI has a strong positive impact on the economic growth of the host country if the host country’s natural resources export is below the statistically significant estimated threshold. However, this FDI-induced economic growth is watered-down if the countries natural resources export is larger than the estimated threshold. The results are robust for alternative indicators of natural resources, i.e., natural resources rents.