【正文】 pital goods at lower cost. However, the application of this more advanced technologies also requires the presence of a sufficient level of human capital in the host economy. The stock of human capital in the host country, therefore, limits the absorptive capability of a developing country, as in Nelson and Phelps (1966), and Benhabib and Spiegel (1994). Hence, the model highlights the roles of both the introduction of more advanced technology and the requirement of absorptive capability in the host country as determinants of economic growth, and suggests the empirical investigation of the plementarity between FDI and human capital in the process of productivity growth. We test the effect of FDI on economic growth in a framework of crosscountry regressions utilizing data on FDI flows from industrial countries to 69 developing countries over the last two decades. Our results suggest that FDI is in fact an important vehicle for the transfer of technology, contributing to growth in larger measure than domestic investment. Moreover, we find that there is a strong plementary effect between FDI and human capital, that is, the contribution of FDI to economic growth is enhanced by its interaction with the level of human capital in the host country. However, our empirical results imply that FDI is more productive than domestic investment only when the host country has a minimum threshold stock of human capital. The results are robust to a number of alternative specifications, which control for the variables usually identified as the main determinants of economic growth in crosscountry regressions. This sensitivity analysis along the lines of Levine and Renelt (1992) shows a robust relationship between economic growth, FDI and human capital. We also investigate the effect of FDI on domestic investment, namely, whether there is evidence that the inflow of foreign capital ‘crowds out’ domestic investment. In principle, this effect could have either sign: by peting in product and financial markets MNCs may displace domestic firms。 conversely, FDI may support the expansion of domestic firms by plementarity in production or by increasing productivity through the spillover of advanced technology. Our results are supportive of a crowdingin effect, that is, a onedollar increase in the inflow of FDI is associated with an increase in total investment in the host economy of more than one dollar, but do not appear to be very robust. Thus, it appears that the main channel through which FDI contributes to economic growth is by stimulating technological progress, rather than by increasing total capital accumulation in the host economy. 二、 Data There are several sources for data on foreign direct investment. Two IMF publications provide data on and gross foreign direct investment (International Financial Statistics, and Balance of Payments Statistics, respectively). Net FDI refers to inflows of outflows, and gross FDI refers only to inflows, that is, foreign direct investment into the country. An OECD publication (Geographical Distribution of Financial Flows to Developing Countries) tallies gross FDI originated in OECD member countries into developing economies. The choice between these alternatives depends on which data set would correspond more closely to the FDI effect we are trying to uncover. In the first place, it seems more appropriate to use gross data bec