University of Tehran Journal of Economic Research (Tahghighat- E- Eghtesadi) 0039-8969 39 3 2004 09 22 An Analysis on the Contribution of Foreign Investment in Economy An Analysis on the Contribution of Foreign Investment in Economy 181 208 13286 FA Journal Article 1970 01 01 The contribution of capital formation in new economic growth models, due <br />to its importance, has been continually expanded. <br />In this paper, based on theoretical analysis and empirical studies, the effects of foreign investment on economic growth with an emphasis on foreign direct investment and foreign portfolio investment are investigated. <br />The results confirm the strengthening of the role of investment and indicate that among different foreign investment flows, FDI plays the most effective role in economic growth. In addition, due to its creative motivations, FDI shows a clearer and stable prospective in development plans aimed growth. In this direction, according to the results of the study, the flexibility of production structures, capacity of investment absorption in host countries and the intensity of the countries requirement to the foreign financial resources are the most important determinants of FDI effectiveness on the countries' economic growth The contribution of capital formation in new economic growth models, due <br />to its importance, has been continually expanded. <br />In this paper, based on theoretical analysis and empirical studies, the effects of foreign investment on economic growth with an emphasis on foreign direct investment and foreign portfolio investment are investigated. <br />The results confirm the strengthening of the role of investment and indicate that among different foreign investment flows, FDI plays the most effective role in economic growth. In addition, due to its creative motivations, FDI shows a clearer and stable prospective in development plans aimed growth. In this direction, according to the results of the study, the flexibility of production structures, capacity of investment absorption in host countries and the intensity of the countries requirement to the foreign financial resources are the most important determinants of FDI effectiveness on the countries' economic growth https://jte.ut.ac.ir/article_13286_83ff2d6787a89320cbe81c4a0e9ec2ee.pdf