Title : Does FDI Inflow Matter for Economic Growth in Asia? A Dynamic Panel Cointegration and Causality Analysis

Authors : Md. Sharif Hossain, Md. Thasinul Abedin

Abstract : Over the last few decades FDI inflows have increased in Asian countries due to liberal trade policies which may play positive role for sustainable economic growth and development in Asia. The World Investment Report published in 2014, Asia experiences substantial growth in inward investment, with $382 billion of FDI inflows in 2013 indicates 4% higher than in 2012. That is why this paper examines the dynamic cointegration and causal relationships between economic growth and FDI inflows for a panel of 27 Asian countries including variables of trade openness, domestic investment and government spending to know what roles are playing these variables on economic growth. In this paper short-run and long-run determinants of economic growth are examined for this panel using time series data for a period of 1970-2013. All panel variables are found to be integrated of order 1. Long-run relationships between the panel variables are established by Kao and Johansen tests. Results indicate that FDI inflow is not a significant determinant for economic growth in Asia but trade openness, government spending and domestic investment are significant determinants of economic growth.

Journal : Empirical Economics Review 8(4): (December 2018) Volume : 8 Year : December, 2018 Issue : 4
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