Endogenous Determination of FDI Growth and Economic Growth:The OECD Case

k^~* = ^~f(k^~*)+^~r(k^~-k^~*)-n^~k^~-c^~-FDI

(B.5)

~~~~

Given that ~ = f ( k '), the growth rate of output is ~~ = — ---

f(k^*) k

. Again,

f '( F) ~
f ( ~')

share of capital income in total income in the foreign country. Substituting respective value of

from (C.5), we may express growth rate of output as

_f'(~∙)~ Γf(k')

^~f(k^~*)

_k~'

₊ ~_r

( k - k)
k *

— n

_k~'

FDI

(B.6)

Hence, the growth rate of foreign economy is positively supported by returns out of sum of claims

"∖~ "∖~

∂g ~_— ∂g ~_—

and negatively by FDI, that is, —~—~— > 0 and-----< 0.

∂(k -k ^') ∂FDI