IDEAS home Printed from https://ideas.repec.org/a/rmk/rmkbae/v7y2020i2p175-190.html
   My bibliography  Save this article

Economic Effects of Inward Foreign Direct Investment in Myanmar

Author

Listed:
  • Thet Mon Soe

Abstract

This paper aims to examine the effects of inward foreign direct investment (FDI) on economic growth and domestic investment at the regional-level and sectoral-levels of Myanmar economy, by applying a panel vector-autoregressive model framework. The major research questions are twofold: whether inward FDI causes economic growth or economic growth attracts inward FDI, and whether inward FDI crowds in or crowds out domestic investment. The main findings are summarized as follows. In the regional level analysis, there is a difference in the FDI-economic growth relationship between the FDI-intensive region and the FDI-less-intensive one. In the FDI-intensive region, the bidirectional FDI-economic growth relationship is found, supporting the both hypotheses of FDI-driven growth and growth-driven FDI, while the FDI-driven growth effect is larger than the growth-driven FDI one. In the FDI-less-intensive region, on the other hand, FDI deteriorates economic growth whereas economic growth still induces FDI. The difference in the FDI-economic growth relationship between the regions might come from the gap in agglomeration effects. In the sectoral level analysis, the crowd-in effect of FDI on domestic investment is found in the non-oil and gas sectors, since the FDI in the oil and gas sector has less linkages to domestic investment.

Suggested Citation

  • Thet Mon Soe, 2020. "Economic Effects of Inward Foreign Direct Investment in Myanmar," Bulletin of Applied Economics, Risk Market Journals, vol. 7(2), pages 175-190.
    • Handle: RePEc:rmk:rmkbae:v:7:y:2020:i:2:p:175-190
    as

    Download full text from publisher

    File URL: https://www.riskmarket.co.uk/bae/journals-articles/issues/economic-effects-of-inward-foreign-direct-investment-in-myanmar/?download=attachment.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    2. Kevin Honglin Zhang, 2001. "How does foreign direct investment affect economic growth in China?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 9(3), pages 679-693, November.
    3. Taguchi, Hiroyuki & Lar, Ni, 2015. "FDI, industrial upgrading and economic corridor in Myanmar," MPRA Paper 64411, University Library of Munich, Germany.
    4. Michael R. M. Abrigo & Inessa Love, 2016. "Estimation of panel vector autoregression in Stata," Stata Journal, StataCorp LP, vol. 16(3), pages 778-804, September.
    5. Shah, Syed Hasanat & Hasnat, Hafsa & Cottrell, Simon & Ahmad, Mohsin Hasnain, 2020. "Sectoral FDI inflows and domestic investments in Pakistan," Journal of Policy Modeling, Elsevier, vol. 42(1), pages 96-111.
    6. LUO Changyuan, 2007. "FDI, domestic capital and economic growth: Evidence from panel data at China's provincial level," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 2(1), pages 92-113, March.
    7. Abdur Chowdhury & George Mavrotas, 2006. "FDI and Growth: What Causes What?," The World Economy, Wiley Blackwell, vol. 29(1), pages 9-19, January.
    8. Changwen Zhao & Jiang Du, 2007. "Causality Between FDI and Economic Growth in China," Chinese Economy, Taylor & Francis Journals, vol. 40(6), pages 68-82, November.
    9. Sims, Christopher A, 1980. "Macroeconomics and Reality," Econometrica, Econometric Society, vol. 48(1), pages 1-48, January.
    10. Taguchi, Hiroyuki, 2019. "Economic effects of inward foreign direct investment in Vietnamese provinces," MPRA Paper 92032, University Library of Munich, Germany.
    11. Michael R.M. Abrigo & Inessa Love, 2016. "Estimation of Panel Vector Autoregression in Stata: a Package of Programs," Working Papers 201602, University of Hawaii at Manoa, Department of Economics.
    12. Jordan Shan, 2002. "A VAR approach to the economics of FDI in China," Applied Economics, Taylor & Francis Journals, vol. 34(7), pages 885-893.
    13. Olajide S. OLADIPO, 2012. "Does Foreign Direct Investment cause long run Economic Growth? Evidence from the Latin America and the Caribbean Countries," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 12(1).
    14. KH Zhang, 2001. "Does Foreign Direct Investment Promote Economic Growth? Evidence From East Asia And Latin America," Contemporary Economic Policy, Western Economic Association International, vol. 19(2), pages 175-185, April.
    15. Levin, Andrew & Lin, Chien-Fu & James Chu, Chia-Shang, 2002. "Unit root tests in panel data: asymptotic and finite-sample properties," Journal of Econometrics, Elsevier, vol. 108(1), pages 1-24, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hidekatsu Asada, 2021. "Determinants of Foreign Direct Investment Inflows to Myanmar," Bulletin of Applied Economics, Risk Market Journals, vol. 8(1), pages 19-28.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. MAÏ ASSAN CHEDI, Maman, 2022. "Does Defence Expenditure Affect Education and Health expenditures in Saharan Africa?," African Journal of Economic Review, African Journal of Economic Review, vol. 10(4), September.
    2. Charles Shaaba Saba & Nicholas Ngepah, 2022. "ICT Diffusion, Industrialisation and Economic Growth Nexus: an International Cross-country Analysis," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 13(3), pages 2030-2069, September.
    3. Clovis Wendji Miamo & Elvis Dze Achuo, 2022. "Can the resource curse be avoided? An empirical examination of the nexus between crude oil price and economic growth," SN Business & Economics, Springer, vol. 2(1), pages 1-23, January.
    4. Charfeddine, Lanouar & Zaouali, Sana, 2022. "The effects of financial inclusion and the business environment in spurring the creation of early-stage firms and supporting established firms," Journal of Business Research, Elsevier, vol. 143(C), pages 1-15.
    5. Ioannis Kostakis, 2020. "Is Tourism a Key Factor for Economic Growth? Fresh Evidence from South Europe Using Panel Cointegration and PVAR Analyses," World Journal of Applied Economics, WERI-World Economic Research Institute, vol. 6(2), pages 123-138, December.
    6. Sleibi, Yacoub & Casalin, Fabrizio & Fazio, Giorgio, 2020. "Bank-specific shocks and aggregate leverage: Empirical evidence from a panel of developed countries," Journal of Financial Stability, Elsevier, vol. 49(C).
    7. Morales, Luis Emilio & Balie, Jean & Magrini, Emiliano, 2021. "How has the minimum support price policy of India affected cross-commodity price linkages?," International Food and Agribusiness Management Review, International Food and Agribusiness Management Association, vol. 24(2), February.
    8. Ryan H. Murphy & Colin O’Reilly, 2019. "Applying panel vector autoregression to institutions, human capital, and output," Empirical Economics, Springer, vol. 57(5), pages 1633-1652, November.
    9. Björn Brey & Matthias S. Hertweck, 2023. "The dynamic effects of monsoon rainfall shocks on agricultural yield, wages, and food prices in India," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(3), pages 616-654, July.
    10. Charles Shaaba Saba & Nicholas Ngepah, 2021. "Nexus between telecommunication infrastructures, defence and economic growth: a global evidence," Netnomics, Springer, vol. 22(2), pages 139-177, December.
    11. Marshall, Emily C. & Saunoris, James & Solis-Garcia, Mario & Do, Trang, 2023. "Measuring the size and dynamics of U.S. state-level shadow economies using a dynamic general equilibrium model with trends," Journal of Macroeconomics, Elsevier, vol. 75(C).
    12. Pazouki, Azadeh & Zhu, Xiaoxian, 2022. "The dynamic impact among oil dependence volatility, the quality of political institutions, and government spending," Energy Economics, Elsevier, vol. 115(C).
    13. Kais Mtar & Walid Belazreg, 2021. "Causal Nexus Between Innovation, Financial Development, and Economic Growth: the Case of OECD Countries," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 12(1), pages 310-341, March.
    14. Riveros Gavilanes, John Michael, 2020. "Military Expenditure and Economic Growth: The South American Case," MPRA Paper 98508, University Library of Munich, Germany.
    15. Hiroyuki Taguchi & Ni Lar & Sereyvuth Ky, 2021. "Revisiting the effects of demographic dynamics on economic growth in Asia: a panel vector‐autoregressive approach with a saving channel," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 35(2), pages 77-94, November.
    16. Charles Shaaba Saba & Nicholas Ngepah, 2022. "Nexus between telecommunication infrastructures, defence and economic growth: a global evidence," Netnomics, Springer, vol. 22(2), pages 139-177, October.
    17. Balcilar, Mehmet & Roubaud, David & Uzuner, Gizem & Wohar, Mark E., 2021. "Housing sector and economic policy uncertainty: A GMM panel VAR approach," International Review of Economics & Finance, Elsevier, vol. 76(C), pages 114-126.
    18. Taguchi, Hiroyuki & Latjin, Mirani, 2022. "The effects of demographic dynamics on economic growth in EU economies: A panel vector autoregressive approach," MPRA Paper 113596, University Library of Munich, Germany.
    19. BOKER Poumie & NKEMGHA ZEUFACK Guivis, 2021. "The Relationship between Energy Transition, Industrialization and Employment: A GMM Panel Var Approach," Energy Economics Letters, Asian Economic and Social Society, vol. 8(1), pages 15-28, June.
    20. Wang, Jing & Rickman, Dan S. & Yu, Yihua, 2022. "Dynamics between global value chain participation, CO2 emissions, and economic growth: Evidence from a panel vector autoregression model," Energy Economics, Elsevier, vol. 109(C).

    More about this item

    Keywords

    Inward foreign direct investment; Myanmar; Economic growth; Domestic investment; Panel vector autoregressive model;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rmk:rmkbae:v:7:y:2020:i:2:p:175-190. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Eleftherios Spyromitros-Xioufis (email available below). General contact details of provider: http://www.riskmarket.co.uk/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.