Liberalization, FDI, and Growth In Developing Countries: A Panel Cointegration Approach
Document Type
Article
Publication Date
7-1-2003
Abstract
Using a panel cointegration framework, the article explores the two-way link between FDI and growth for a panel of 23 developing countries. In addition, it investigates the impact of liberalization on the dynamics of the FDI and GDP relationship. A long-run cointegrating relationship is found between FDI and GDP after allowing for heterogeneous country effects. The cointegrating vectors reveal a bidirectional causality between GDP and FDI for more open economies. For relatively closed economies, long-run causality appears unidirectional and runs from GDP to FDI, implying that growth and FDI are not mutually reinforcing under restrictive trade and investment regimes.
DOI
10.1093/ei/cbg024
MSU Digital Commons Citation
Basu, Parantap; Chakraborty, Chandana; and Reagle, Derrick, "Liberalization, FDI, and Growth In Developing Countries: A Panel Cointegration Approach" (2003). Department of Economics Faculty Scholarship and Creative Works. 32.
https://digitalcommons.montclair.edu/economics-facpubs/32