Abstract Eleven 2007

GLOBAL

DEVELOPMENT STUDIES

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Volume Four Winter 2006-Spring 2007 Numbers 3-4.

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Theme: Global Labor Migration and Emerging Trends in Development Finance: An Assessment of the

Economic and Social Impact of Migrant (Worker) Remittances in Central America and the Caribbean

FOREIGN DIRECT INVESTMENT, ABSORPTIVE CAPACITY AND ECONOMIC GROWTH IN JAMAICA

Marie Freckleton

Department of Economics

University of the West Indies

Mona, Kingston 7, Jamaica

Published Online: February 10, 2017

ABSTRACT

This article examines the influence of absorptive capacity on the impact of foreign direct investment on economic growth in Jamaica. The methodology involves estimation of a growth equation using data for the period 1970-2004. Measures of human capital and financial sector development are used as indicators of absorptive capacity. The empirical results indicate that the two indicators of absorptive capacity are complementary to foreign direct investment. The article concludes that for those developing countries with low absorptive capacity, provision of costly incentives may constitute a waste of resources.