Liberalization, FDI, and Growth in Developing Countries: A Panel Cointegration Approach

Economic Inquiry - Tập 41 Số 3 - Trang 510-516 - 2003
Parantap Basu1, Chandana Chakraborty2, Derrick P. Reagle3,4
1Associate Professor, Department of Economics, Fordham University, Bronx, NY 10458. Phone 1–718–817–4061,
2Associate Professor, Department of Economics and Finance, Montclair State University, Upper Montclair, NJ 07043. Phone 1–973–655–4125,
3Assistant Professor, Department of Economics, Fordham University, Bronx, NY 10458. Phone 1–718–817–4048,
4We wish to thank Peter Pedroni and participants of the 2001 ASSA National Conference for valuable comments and discussion.

Tóm tắt

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.

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Economic Inquiry

Tập 41 Số 3

510-516

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