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

Year: 2003

Type: article

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.

Source: Economic Inquiry

DOI: 10.1093/ei/cbg024

Authors: Parantap Basu, Chandana Chakraborty, Derrick Reagle

Institutions: Fordham University, Montclair State University

Language: English

Topic: International Business and FDI

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDGs: Decent work and economic growth, Partnerships for the goals, Industry, innovation and infrastructure

Open Access status: green

OpenAlex ID: W2155395273

FWCI: 16.52

Cites: 20

Cited by: 314

Related to: 9