Copyright © 2007 International Development Options
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Volume Four Winter 2006-Spring 2007 Numbers 3-4.
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
Department of Economics
University of the West Indies
Mona, Kingston 7, Jamaica
Published Online: February 10, 2017
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.