IDEAS home Printed from https://ideas.repec.org/a/ksb/journl/v6y2013p87-99.html
   My bibliography  Save this article

The Relationship between Gross Domestic Product and Foreign Direct Investment: The Case of Cambodia

Author

Listed:
  • Lim GuechHeang

    () (Pannasastra University of Cambodia, Phnom Penh, Cambodia.)

  • Pahlaj Moolio

    () (Pannasastra University of Cambodia, Phnom Penh, Cambodia.)

Abstract

Foreign Direct Investment (FDI) is widely believed to have positive effects on economic growth; yet for Cambodia, over 19 years (1993-2011) of attracting FDI inflows, the growth rate of Gross Domestic Product (GDP) has averaged at 7%, which demand a modest attempt to study their relationship whether FDI drives growth of Cambodia’s economic output. This paper aims to examine the relationship between foreign direct investment and gross domestic product of Cambodia in long run over the period of 1993-2011 by using simple regression analysis, Augmented Dickey-Fuller test, Durbin-Watson test, Breusch-Godfrey Serial Correlation LM test, Breusch-Pagan-Godfrey test, and Jarque-Bera test. The result from regression found that there is a positive relationship between FDI and GDP in the long run in Cambodia, which is also supported by qualitative studies that is based on the collection of existing studies from recognized domestic and international institutions, people in senior positions, and researchers. All of the qualitative studies presented in this paper claim that FDI positively affects GDP, and most significantly, to the employment opportunities generated for local people, which in the long run help unemployment and poverty reduction in Cambodia. However, GDP growth rate has averaged at 7% over 19 years although the influx of FDI inflows dramatic increase probably because of the internal factors of Cambodia, particularly the limited absorptive capability of the advanced technology.

Suggested Citation

  • Lim GuechHeang & Pahlaj Moolio, 2013. "The Relationship between Gross Domestic Product and Foreign Direct Investment: The Case of Cambodia," KASBIT Business Journals, Khadim Ali Shah Bukhari Institute of Technology (KASBIT), vol. 6, pages 87-99, December.
  • Handle: RePEc:ksb:journl:v:6:y:2013:p:87-99
    as

    Download full text from publisher

    File URL: http://kasbit.edu.pk/kbjvol6/7-The%20Relationship%20between%20GDP%20and%20FDI.pdf
    Download Restriction: no

    Citations

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


    Cited by:

    1. Saba Jameel & Muhammad Zahid Naeem, 2016. "Impact of Human Capital on Economic Growth: A Panel Study," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 5(4), pages 231-248, December.

    More about this item

    Keywords

    FDI; GDP; Foreign Investment; Domestic Investment; Growth;

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications

    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:ksb:journl:v:6:y:2013:p:87-99. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Yasir Jaseem). General contact details of provider: http://edirc.repec.org/data/fmkaspk.html .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.