The FDI literature asks three questions. Does FDI raise growth? Borensztein, De Gregorio and Lee (1998) is the most-cited paper on that question. Do domestic firms benefit? Javorcik (2004) found evidence of productivity spillovers to local suppliers of foreign affiliates, while Görg and Greenaway (2004) judged robust empirical support for positive spillovers to be at best mixed. What attracts FDI? Asiedu (2002) and Busse and Hefeker (2007) examine Africa and political risk. The most-cited recent work relates FDI to energy and the environment.
How the literature is organised
The foundational papers date from the 1990s and 2000s. On growth, Balasubramanyam, Salisu and Sapsford (1996) compared export-promoting and import-substituting regimes, Borensztein, De Gregorio and Lee (1998) asked how FDI affects economic growth, and de Mello (1999) used time-series and panel data for OECD and non-OECD countries.
On spillovers, Markusen and Venables (1999) modelled how multinationals can act as a catalyst for local industry through linkages. Javorcik (2004) found evidence consistent with this in Lithuanian firm-level data: positive productivity spillovers through contacts between foreign affiliates and their local suppliers. Görg and Greenaway (2004), "Much Ado about Nothing?", reviewed the evidence on productivity, wage and export spillovers and concluded that robust empirical support for positive spillovers was at best mixed. Feenstra and Hanson (1997) studied FDI and relative wages using evidence from Mexico's maquiladoras.
On determinants, Asiedu (2002) asked whether the determinants of FDI to developing countries are different for Africa. Busse and Hefeker (2007) related political risk and institutions to inflows. Buckley et al. (2007) studied the determinants of Chinese outward investment.
Main debates
The central debate is whether host economies benefit. Görg and Greenaway (2004) start from the observation that governments offer significant inducements to attract investment in the expectation of spillovers, and find the evidence for those spillovers mixed. Javorcik (2004) shows why the channel matters: her evidence is for spillovers to suppliers in upstream sectors. On growth, the listed studies differ by trade regime (Balasubramanyam, Salisu and Sapsford, 1996) and country group (de Mello, 1999).
Where recent work is heading
The most-cited papers since 2021 almost all relate FDI to energy and the environment: renewable energy consumption (Khan et al., 2021; Shahbaz et al., 2022), carbon emissions in China (Wang et al., 2021) and in Bangladesh (Islam et al., 2021), and green total factor energy efficiency from outward investment (Ren, Hao and Wu, 2022).
Most-cited foundational papers
Published before 2021 and ranked by how often later work cites them. Read the abstract of each and the full text of the three or four closest to your question. Citation count measures attention, not quality, so treat this as a map of what the field has argued about rather than a ranking of what is true.
Primary studies and conceptual papers from 2021 onwards. A paper published in 2024 has had a few years to accumulate citations where the works in the section above have had decades, so compare these counts with each other rather than with the ones above.
The fastest way into a literature. A good review gives you the structure of the field, a reference list to mine and, in its limitations section, the gaps other researchers have already spotted.
Mohammad Shaiful Islam, Ahmed Beloucif (2024). Foreign Trade Review.
Cited by 59Open accessdoi:10.1177/00157325231158846
How big the literature is, and where it is published
OpenAlex indexes 32,640 works whose title matches this topic. The chart shows how many were published each year from 2000 to 2025; the current year is left out because it is incomplete.
Show the numbers as a table
Year
Works
2000
352
2001
424
2002
426
2003
553
2004
571
2005
569
2006
649
2007
767
2008
797
2009
895
2010
940
2011
1,124
2012
1,203
2013
1,308
2014
1,374
2015
1,373
2016
1,291
2017
1,405
2018
1,409
2019
1,509
2020
1,655
2021
1,435
2022
1,269
2023
1,647
2024
1,477
2025
1,732
Journals behind the most-cited work
Counted across the 370 most-cited works on the topic, not across everything published. Browsing recent issues of the first two or three is a reliable way to find current work that has not yet been cited much.
Environmental Science and Pollution Research41 papers
Journal of International Business Studies21 papers
Journal of International Economics12 papers
Renewable Energy11 papers
Journal of Development Economics9 papers
Sustainability8 papers
Energies7 papers
Energy7 papers
Search strings to copy
Written for databases that accept Boolean operators (Scopus, Web of Science, ERIC, PubMed, EBSCO). Quotation marks keep a phrase together, an asterisk stands in for the end of a word, and OR groups go in brackets. British and American spellings are written out with OR rather than covered by a single-character wildcard, because those wildcards differ between databases: PubMed’s help page documents the asterisk only, and asks for at least four characters before it. Limit the search to title and abstract first; widen it only if you get too little. Our guide to starting a literature review covers how to record what you searched.
FDI and growth
("foreign direct investment" OR FDI) AND ("economic growth" OR GDP) AND ("developing countr*" OR "emerging econom*" OR panel OR ARDL)
Spillovers
("foreign direct investment" OR FDI OR multinational*) AND (spillover* OR productivity OR "technology transfer" OR linkages) AND (firm* OR plant*)
Determinants
("foreign direct investment" OR FDI) AND (determinant* OR institution* OR "political risk" OR corruption OR "tax") AND (inflow* OR location)
Explore foreign direct investment in Wonders →Opens Wonders on this question. Once you are signed in it becomes a project with suggested sub-topics and keywords you can edit before searching. The trial is 14 days.
Sub-topics to narrow into
A thesis-sized question usually sits inside one of these, combined with a population or a setting.
Growth effects
Borensztein, De Gregorio and Lee (1998), Balasubramanyam, Salisu and Sapsford (1996) and de Mello (1999).
Productivity spillovers
Javorcik (2004) on vertical linkages; Görg and Greenaway (2004) review the evidence; Markusen and Venables (1999) give the theory.
Determinants and institutions
Asiedu (2002) on Africa; Busse and Hefeker (2007) on political risk and institutions.
Recent papers relate FDI to carbon emissions and renewable energy consumption.
How to cite these papers
Every paper above has a DOI, a part of the reference that is easy to leave out. Here is one of them, “How does foreign direct investment affect economic growth?” (1998), in the two styles students ask about most:
APA 7th edition
Borensztein, E., De Gregorio, J., & Lee, J.-W. (1998). How does foreign direct investment affect economic growth? Journal of International Economics, 45(1), 115–135. https://doi.org/10.1016/s0022-1996(97)00033-0
MLA 9th edition
Borensztein, E., et al. “How Does Foreign Direct Investment Affect Economic Growth?” Journal of International Economics, vol. 45, no. 1, 1998, pp. 115–35, https://doi.org/10.1016/s0022-1996(97)00033-0.
Check the details against the article itself before you submit: databases, including the one behind this page, sometimes carry the online-first year rather than the volume year. Full rules and more examples are in our guides to APA, MLA, Chicago, Harvard, Vancouver and ABNT, with the rest in the citation guides. You can also format a reference from its DOI with our free citation tools.
Frequently asked questions
Does FDI cause economic growth?
The listed papers suggest that it depends on the host country. Balasubramanyam, Salisu and Sapsford (1996), with cross-section data on 46 developing countries, tested the hypothesis that the growth effect of FDI is stronger under outward-oriented than under inward-oriented trade policy. De Mello (1999) provides time series and panel evidence for OECD and non-OECD countries from 1970 to 1990. Borensztein, De Gregorio and Lee (1998) is the most-cited study of the question; read it for the conditions under which they find an effect.
Why is there only one recent review on this page?
Few recent papers combine foreign direct investment and review terms in their titles; reviews tend to be framed around spillovers, multinationals or a region. Islam and Beloucif (2024) systematically review empirical studies of determinants. For spillovers, start from Görg and Greenaway (2004) and look at what cites it.
Is the FDI and CO2 emissions literature worth engaging with?
It is heavily cited, as the recent list shows: the most-cited papers since 2021 relate FDI to carbon emissions, renewable energy consumption and energy efficiency in particular countries or country groups. If you work in this area, compare the samples and methods of the studies before comparing their findings, justify your own, and discuss endogeneity.
How this page was made
The lists come from OpenAlex, an open index of scholarly works whose data are published under a CC0 licence, queried on September 21, 2026 for works whose title matches "foreign direct investment". Only works with a DOI are listed. Each one was checked against the publisher’s own record at Crossref or DataCite (title, year, first author, journal, volume and pages), and in three cases, where the publisher deposited no byline, against PubMed; anything OpenAlex or Crossref flags as retracted was left out, and an editor took out results that matched the words but not the subject. Citation counts are OpenAlex’s on that date and are usually lower than Google Scholar’s, which counts more kinds of document. Ranking by citations tells you what a field has relied on, not what is correct; several heavily cited papers on any topic are cited because later work disputes them. Books without a DOI are missing, which matters in fields where the founding text is a book.
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