Foreign direct investment and well-being, 1985-2010: a structural approach

This paper examines the relationship between foreign direct investment and well-being in poor countries, as measured by life expectancy and child mortality. The effect of foreign direct investment on impoverished nations has long been the subject of debate in both economics and sociology. While much of the previous literature has investigated foreign direct investment's effect on measures of well-being, this paper constitutes a new contribution by examining the structure of this investment in the form of foreign direct investment concentration. Foreign direct investment concentration is the proportion of investment from the top investing nation, and greater levels are hypothesized to have a detrimental impact on life expectancy and under-five mortality. Drawing from a variety of theoretical perspectives, including modernization/liberalism and dependency theory, this paper uses a panel data set and a longitudinal methodology. The hypothesis is partially supported: while neither FDI nor FDI concentration are significant indicators of life expectancy or under-five mortality, FDI concentration reduces life expectancy in Asian countries.