Does foreign direct investment (FDI) increase domestic investment, or does it provide additional foreign exchange for a pre-existing current account deficit, or some linear combination of the two? The author investigates this question for a group of five Pacific Basin countries and a control...

This paper is part of a larger effort to study the determinants and impact of foreign direct investment. The authors examine flows of foreign direct investment to 46 developing countries to test whether such flows are autonomous or accommodating vis-a-vis the current account and other capital...