Impacts of FDI on the GDP of the USA

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ECONOMICS ASSIGNMENT

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Table of contents
Introduction................................................................................................................................3
Literature review........................................................................................................................3
Selection of hypothesis..............................................................................................................3
Findings of the preliminary data analysis..................................................................................3
Explanations...............................................................................................................................6
Summary....................................................................................................................................6
References..................................................................................................................................7

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Introduction
FDI is the foreign direct investment which allows the foreign investors to invest in foreign
market through the capital, technological know-how or through both. The main aim of the
increase in the FDI is that it would allow the economy to grow faster than before. Although
its intensity can be realised more in the case of emerging economy, the developed economy
also shows the positive signs of growing upon the effects of FDI. The aim of this paper is to
examine the impacts of FDI in case of the economy of the USA.
Literature review
According to Saidi, Mbarek & Amamri (2018), the FDI works as a growth component of
GDP. The transfer of technological know-how and the capital in other countries allow the
country to produce more in a cost effective way. This transfer not only helps a number of
specific firms associated with the transfer it impacts the economy as a whole. Due to the
perfect information available to the other producers of the domestic market, the FDI reduces
the cost of production for the overall economy. Apart from that, the openness of the
investment market also allows for fewer failures and boosting the economic growth of the
destination country. In addition to that, the FDI inflow in a country also raises the income of
the government as well. Therefore, Infrastructure development is also influenced by the FDI
inflow of a country.
Selection of the hypothesis
The hypothesis for the study is,
H0= FDI is GDP of the USA is positively related to each other
H1= FDI is not related to the GDP of the USA.
Findings of the preliminary data analysis
The data for the analysis of the study has been collected from the central bureau of economic
analysis department of commerce, USA. The GDP data and the FDI data have been collected
and the correlation between the variables has been done. The data for the two variables have
been collected from the year 2000 to 2015.
Year GDP (Billion dollars USD) FDI( Trillion USD)
2000-01-01 10284.775 1.26