First-generation industry-level (cross-sectional) studies,
such as Caves (1974), generally found a positive
correlation between foreign presence and sectoral productivity.
A second generation of papers using cross-country
growth regressions and other applications of econometric
techniques, however, found only weak support for an
exogenous positive effect of FDI on economic growth
(Alfaro et al., 2004; Borensztein et al., 1998; Carkovic and
Levine, 2005). Paralleling the macro evidence, Aitken
and Harrison’s (1999) analysis of micro-level plant-level
data inVenezuela foundthe net effect ofFDI onproductivity
to be quite small, productivity being enhanced in
plants targetedfor investmentbut loweredindomestically
owned plants