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Dynamic Linkages between FDI Inflows and Domestic Investment: A Panel Cointegration Approach

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  • Nicholas Apergis

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  • Costantinos Katrakilidis

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  • Nikolaos Tabakis

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Abstract

This paper analyzes the dynamic relationship between FDI inflows and domestic investment for a panel of selected countries by means of panel cointegration and causality techniques. Specifically, the paper provides empirical evidence regarding the existence of possible crowding in or crowding out effects between FDI inflows and domestic investment, accounting for the location and the level of development of the host countries. Copyright International Atlantic Economic Society 2006

Suggested Citation

  • Nicholas Apergis & Costantinos Katrakilidis & Nikolaos Tabakis, 2006. "Dynamic Linkages between FDI Inflows and Domestic Investment: A Panel Cointegration Approach," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 34(4), pages 385-394, December.
  • Handle: RePEc:kap:atlecj:v:34:y:2006:i:4:p:385-394 DOI: 10.1007/s11293-006-9026-x
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    References listed on IDEAS

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    1. Cardoso, Eliana A. & Dornbusch, Rudiger, 1989. "Foreign private capital flows," Handbook of Development Economics,in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 2, chapter 26, pages 1387-1439 Elsevier.
    2. 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 133-151, January.
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    Citations

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    Cited by:

    1. Neil Dias Karunaratne, 2013. "Perspectives on Total Factor Productivity and Foreign Direct Investment in OECD Countries based on Panel Data Econometrics," Journal of Knowledge Management, Economics and Information Technology, ScientificPapers.org, vol. 3(2), pages 1-8, April.
    2. Ramirez, Miguel D., 2008. "Are Foreign and Public Capital Productive in the Mexican Case? A Panel Unit Root and Panel Cointegration Analysis," Working Papers 49, Yale University, Department of Economics.
    3. Chan, M.W. Luke & Hou, Keqiang & Li, Xing & Mountain, Dean C., 2014. "Foreign direct investment and its determinants: A regional panel causality analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(4), pages 579-589.
    4. Apergis Nicholas, 2008. "Foreign Direct Investment Inward and Foreign Direct Investment Outward: Evidence from Panel Unit Root and Cointegration Tests with a Certain Number of Structural Changes," Global Economy Journal, De Gruyter, vol. 8(1), pages 1-16, February.
    5. Farla, Kristine & de Crombrugghe, Denis & Verspagen, Bart, 2016. "Institutions, Foreign Direct Investment, and Domestic Investment: Crowding Out or Crowding In?," World Development, Elsevier, vol. 88(C), pages 1-9.
    6. Marco Faravelli & Santiago Sanchez-Pages, 2015. "(Don’t) Make My Vote Count," Journal of Theoretical Politics, , vol. 27(4), pages 544-569, October.
    7. Akhtiar Ahmed Ghumro & Ahmed Nawaz Hakro, "undated". "Foreign Direct Investment, Determinants And Policy Analysis: Case Study Of Pakistan," Working Papers 2007_04, Business School - Economics, University of Glasgow.
    8. Hussain Ali Bekhet & Raed Walid Al-Smadi, 2016. "The dynamic causality between FDI inflow and its determinants in Jordan," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 11(1), pages 26-47.
    9. Borko Handjiski, 2009. "Investment Matters : The Role and Patterns of Investment in Southeast Europe," World Bank Publications, The World Bank, number 5920.
    10. Buhari Doğan, 2016. "The Effects of Globalization on Employment: Bounds Test Approach in Turkey Sample," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 6(10), pages 620-633, October.
    11. Ramirez, Miguel D., 2007. "Is Foreign Direct Investment Productive in the Latin America Case? A Panel Unit Root and Panel Cointegration Analysis, 1980-2001," Working Papers 23, Yale University, Department of Economics.
    12. Alessia A. Amighini & Margaret S. McMillan & Marco Sanfilippo, 2017. "FDI and Capital Formation in Developing Economies: New Evidence from Industry-level Data," NBER Working Papers 23049, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    C33; C51; F21); FDI inflows; domestic investment; panel cointegration;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation

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