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Foreign Direct Investment and Growth: An Empirical Investigation based on Cross-Country Comparison

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Author Info

  • Ozturk, Ilhan

    () (Faculty of Economics and Administrative Sciences, Cag University, Yenice, Mersin)

  • Kalyoncu, Huseyin

    () (Department of Economics, Nig˘de University)

Abstract

This paper investigates empirically the impact of FDI on economic growth of Turkey and Pakistan over the period of 1975-2004. To analyse the causal relationship between FDI and economic growth, the Engle-Granger cointegration and Granger causality tests are used. It is found that these two variables are cointegrated for both countries studied. Our empirical fi ndings suggest that it is GDP that causes FDI in the case of Pakistan, while there is strong evidence of a bi-directional causality between the two variables for Turkey.

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Bibliographic Info

Article provided by Camera di Commercio di Genova in its journal Economia Internazionale / International Economics.

Volume (Year): 60 (2007)
Issue (Month): 1 ()
Pages: 75-81

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Handle: RePEc:ris:ecoint:0066

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Related research

Keywords: Economic growth; foreign direct investment; Granger causality;

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References

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  1. Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," The Journal of Development Studies, Taylor and Francis Journals, vol. 34(1), pages 1-34.
  2. Asiedu, Elizabeth, 2002. "On the Determinants of Foreign Direct Investment to Developing Countries: Is Africa Different?," World Development, Elsevier, vol. 30(1), pages 107-119, January.
  3. Chakrabarti, Avik, 2001. "The Determinants of Foreign Direct Investment: Sensitivity Analyses of Cross-Country Regressions," Kyklos, Wiley Blackwell, vol. 54(1), pages 89-113.
  4. Nair-Reichert, Usha & Weinhold, Diana, 2001. " Causality Tests for Cross-Country Panels: A New Look at FDI and Economic Growth in Developing Countries," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 63(2), pages 153-71, May.
  5. Balasubramanyam, V N & Salisu, M & Sapsford, David, 1996. "Foreign Direct Investment and Growth in EP and IS Countries," Economic Journal, Royal Economic Society, vol. 106(434), pages 92-105, January.
  6. Blomstrom, Magnus & Kokko, Ari, 1998. " Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-77, July.
  7. de Mello, Luiz R, Jr, 1999. "Foreign Direct Investment-Led Growth: Evidence from Time Series and Panel Data," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 133-51, January.
  8. Harrison, Ann, 1994. "Multinationals in economic development: the benefits of FDI," MPRA Paper 36270, University Library of Munich, Germany.
  9. Chowdhury, Abdur R. & Mavrotas, George, 2005. "FDI and Growth: A Causal Relationship," Working Papers RP2005/25, World Institute for Development Economic Research (UNU-WIDER).
  10. Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995. "How Does Foreign Direct Investment Affect Economic Growth?," NBER Working Papers 5057, National Bureau of Economic Research, Inc.
  11. V. N. Balasubramanyam & M. Salisu & David Sapsford, 1999. "Foreign direct investment as an engine of growth," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 8(1), pages 27-40.
  12. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
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Cited by:
  1. Faruk Gürsoy & Hüseyin Kalyoncu, 2012. "Foreign Direct Investment and Growth Relationship in Georgia," International Journal of Economics and Financial Issues, Econjournals, vol. 2(3), pages 267-271.
  2. Kumar, Sundaram, 2009. "Investigating causal relationship between stock return with respect to exchange rate and FII: evidence from India," MPRA Paper 15793, University Library of Munich, Germany.
  3. Tatomir, Cristina F. & Popovici, Oana, 2011. "Eyes on Romania: what to look when investing here?," MPRA Paper 36140, University Library of Munich, Germany.
  4. Syed Imran Ali Meerza, 2012. "Causal links between trade, foreign direct investment and economic growth for Bangladesh," SDSU Working Papers in Progress 12012, South Dakota State University, Department of Economics.

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