How does foreign aid shape where and how multinational firms invest?
Our new study shows that aid design, and especially the use of non-grant instruments, matters.
Flladina Zilja and Salma Mahamed co-authors new article in Journal of International Business Policy
Foreign direct investment (FDI) is crucial for the economic development of low- and middle-income countries, as it can bring in capital, technology, and jobs. However, attracting FDI is challenging, especially for developing countries with limited resources and infrastructure. Foreign aid can play a significant role in enhancing a country's ability to attract FDI by investing in infrastructure and human capital. This study explores how foreign aid influences firm investments, focusing on the mechanisms that encourage firms to invest in countries receiving aid. Link to article.
