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How does foreign direct investment affect economic growth? 1 We are grateful for comments from Robert Barro; Elhanan Helpman; Boyan Jovanovic; Mohsin Khan; Se-Jik Kim; Donald Mathieson; Sergio Rebelo; Jeffrey Sachs; Peter Wickham; and two anonymous referees. Comments by participants in seminars at 1995 World Congress of the Econometric Society; Korean Macroeconomics Workshop; Kobe University; and Osaka University were very helpful. This paper was.[J].E. Borensztein;J. De Gregorio;J-W. Lee.Journa