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FDI Inflows-Economic Globalization Nexus in ASEAN Countries: The Panel Bootstrap Causality Test Based on Wavelet Decomposition

Author

Listed:
  • Muhammed Sehid Gorus

    (Ankara Yıldırım Beyazıt University)

  • Veli Yilanci

    (Canakkale Onsekiz Mart University)

  • Maxwell Kongkuah

    (Jiangsu University)

Abstract

This study aims to investigate the causal linkage between foreign direct investment (FDI) inflows and economic globalization (considering de facto and de jure indexes) for 7 Association of Southeast Asian Nations (ASEAN) countries for 1985–2018. Our sample consists of Indonesia, Laos, Malaysia, the Philippines, Singapore, Thailand, and Vietnam. Empirically, we propose the panel bootstrap causality test based on wavelet decomposition to find a causal link between the series in different time scales. The main advantages of the methodology can be listed as follows; (a) testing the unit root behavior of the series, or existence of a cointegration relationship between the series are not pre-requisites, (b) one can test the causal relationship between the series in different time scales. Also, we employ the panel bootstrap causality test of Kónya (Econ Modell 23:978–992, 2006) to compare our results with the panel bootstrap causality test based on wavelet decomposition. In addition to the causality analyses, this study utilizes the panel bootstrap cointegration test of Westerlund-Edgerton (2007) to find long-run relationship between variables. The proposed method’s results exhibit that ASEAN countries’ FDI inflows and types of economic globalization levels have mutually affected each other, especially in the long-run. The empirical findings offer some significant implications for policymakers.

Suggested Citation

  • Muhammed Sehid Gorus & Veli Yilanci & Maxwell Kongkuah, 2023. "FDI Inflows-Economic Globalization Nexus in ASEAN Countries: The Panel Bootstrap Causality Test Based on Wavelet Decomposition," Asia-Pacific Financial Markets, Springer;Japanese Association of Financial Economics and Engineering, vol. 30(2), pages 339-362, June.
    • Handle: RePEc:kap:apfinm:v:30:y:2023:i:2:d:10.1007_s10690-022-09377-5
    DOI: 10.1007/s10690-022-09377-5
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    More about this item

    Keywords

    ASEAN countries; Economic globalization; FDI inflows; Panel bootstrap causality; Wavelet decomposition;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F40 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - General
    • F60 - International Economics - - Economic Impacts of Globalization - - - General

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