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Causal Nexus between Economic Complexity and FDI: Empirical Evidence from Time Series Analysis

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  • Hameed Khan
  • Umair Khan
  • Muhammad Asif Khan

Abstract

The rapid economic emergence of China is credited to be its products and economic complexity. Foreign direct investment, with its better-embedded knowhow and technology, is one of the main drivers for the higher economic complexity of China. By applying the ARDL and VECM approaches; this study confirms the long-run bidirectional and short-run unidirectional causal relationship between economic complexity and foreign direct investment. Besides, we include additional control variables such as institutional quality, information & communication technology, trade openness, per capita GDP, domestic investment, and human capital, which are found robust in our analysis.

Suggested Citation

  • Hameed Khan & Umair Khan & Muhammad Asif Khan, 2020. "Causal Nexus between Economic Complexity and FDI: Empirical Evidence from Time Series Analysis," Chinese Economy, Taylor & Francis Journals, vol. 53(5), pages 374-394, September.
    • Handle: RePEc:mes:chinec:v:53:y:2020:i:5:p:374-394
    DOI: 10.1080/10971475.2020.1730554
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