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Role of China’s Outward Direct Investment and Outward Lending on Economic Growth of South Asia Countries

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  • Abdul Sattar
  • Muhammad Hamid Nasir

Abstract

This work analyses whether China’s lending and outward direct investment impact the economic growth of South Asian countries. This study used panel data for the years 2004 to 2019 of selected South Asian countries. For empirical estimation, it employed Pooled Ordinary Least Square for baseline regression estimates and to control for possible endogeneity it used fully FOLS, DOLS, 2SLS, and GMM for robustness checking. Furthermore, it also employed Quantile regression for the validity of the results. The empirical estimates report that Chinese lending and FDI have a positive and significant influence on the growth performance of South Asia countries. In addition, the marginal contribution of bilateral trade to South Asian country’s economic growth is nonlinear. Finally, there exists a bidirectional causality between lending and economic growth and a unidirectional causality between GDP and ODI.

Suggested Citation

  • Abdul Sattar & Muhammad Hamid Nasir, 2025. "Role of China’s Outward Direct Investment and Outward Lending on Economic Growth of South Asia Countries," Chinese Economy, Taylor & Francis Journals, vol. 58(4), pages 280-295, July.
    • Handle: RePEc:mes:chinec:v:58:y:2025:i:4:p:280-295
    DOI: 10.1080/10971475.2024.2396718
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