The Nexus between FDI and Growth in the SAARC Member Countries
This paper examines the effects of foreign direct investment (FDI) on South Asian economies' output growth, utilizing recent panel cointegration testing and estimation techniques. Annual panel data on eight SAARC (South Asian Association for Regional Cooperation) member countries' macroeco...
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Korea Institute for International Economic Policy
2015-03-01
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Online Access: | http://dx.doi.org/10.11644/KIEP.JEAI.2015.19.1.290 |
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doaj-d020c5196ec14b01b9a5c84c9f9f4f022020-11-24T22:31:40ZengKorea Institute for International Economic PolicyEast Asian Economic Review2508-16402508-16672015-03-011913970http://dx.doi.org/10.11644/KIEP.JEAI.2015.19.1.290The Nexus between FDI and Growth in the SAARC Member Countries Sangjoon Jun 0Department of International Trade, Kangnam UniversityThis paper examines the effects of foreign direct investment (FDI) on South Asian economies' output growth, utilizing recent panel cointegration testing and estimation techniques. Annual panel data on eight SAARC (South Asian Association for Regional Cooperation) member countries' macroeconomic variables over the period 1960- 2013 are employed in empirical analysis. Using various heterogeneous panel cointegration and panel causality tests, a bi-directional relationship between FDI and growth is found. We find evidence for both FDI-led growth and growth-induced FDI hypotheses for the South Asian economies over the sample period. Individual member countries exhibit heterogeneity in terms of the direction or existence of causality subject to their idiosyncratic economic conditions. Among various regressors, FDI, financial development, human capital, and government consumption show the most significant positive effects on output growth. As determinants of FDI, GDP, financial development, human capital, and government consumption are found significant in the region. The bi-directional causality between FDI and growth is found robust to the inclusion of other control variables and using different estimation techniques.http://dx.doi.org/10.11644/KIEP.JEAI.2015.19.1.290FDIGrowthHeterogenityPanel Cointegration and CausalitySAARC |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Sangjoon Jun |
spellingShingle |
Sangjoon Jun The Nexus between FDI and Growth in the SAARC Member Countries East Asian Economic Review FDI Growth Heterogenity Panel Cointegration and Causality SAARC |
author_facet |
Sangjoon Jun |
author_sort |
Sangjoon Jun |
title |
The Nexus between FDI and Growth in the SAARC Member Countries |
title_short |
The Nexus between FDI and Growth in the SAARC Member Countries |
title_full |
The Nexus between FDI and Growth in the SAARC Member Countries |
title_fullStr |
The Nexus between FDI and Growth in the SAARC Member Countries |
title_full_unstemmed |
The Nexus between FDI and Growth in the SAARC Member Countries |
title_sort |
nexus between fdi and growth in the saarc member countries |
publisher |
Korea Institute for International Economic Policy |
series |
East Asian Economic Review |
issn |
2508-1640 2508-1667 |
publishDate |
2015-03-01 |
description |
This paper examines the effects of foreign direct investment (FDI) on South Asian economies' output growth, utilizing recent panel cointegration testing and estimation techniques. Annual panel data on eight SAARC (South Asian Association for Regional Cooperation) member countries' macroeconomic variables over the period 1960- 2013 are employed in empirical analysis. Using various heterogeneous panel cointegration and panel causality tests, a bi-directional relationship between FDI and growth is found. We find evidence for both FDI-led growth and growth-induced FDI hypotheses for the South Asian economies over the sample period. Individual member countries exhibit heterogeneity in terms of the direction or existence of causality subject to their idiosyncratic economic conditions. Among various regressors, FDI, financial development, human capital, and government consumption show the most significant positive effects on output growth. As determinants of FDI, GDP, financial development, human capital, and government consumption are found significant in the region. The bi-directional causality between FDI and growth is found robust to the inclusion of other control variables and using different estimation techniques. |
topic |
FDI Growth Heterogenity Panel Cointegration and Causality SAARC |
url |
http://dx.doi.org/10.11644/KIEP.JEAI.2015.19.1.290 |
work_keys_str_mv |
AT sangjoonjun thenexusbetweenfdiandgrowthinthesaarcmembercountries AT sangjoonjun nexusbetweenfdiandgrowthinthesaarcmembercountries |
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