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Foreign Direct Investment In Asean Countries, 1990-2012

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  • BHATT, P.R.

Abstract

The objectives of the paper are to study foreign trade and investment dimensions of ASEAN and to study the role of FDI to the growth of exports. Vector autoregression model (VAR) is adopted to estimate the long run causal relationship between exports, foreign direct investment and GDP. The cointegration test result shows that there exists a long run equilibrium relationship between exports, FDI and GDP. It is found from the estimated Error Correction Model that FDI is a significant variable and the result indicates that 1 unit increase in FDI in ASEAN will lead to 1.1 units increase in exports. Wald Test indicates that there is a bilateral relationship between Exports and FDI but unilateral relationship between FDI and GDP and the direction is from FDI to GDP which means that FDI causes GDP.

Suggested Citation

  • Bhatt, P.R., 2014. "Foreign Direct Investment In Asean Countries, 1990-2012," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 23(4).
  • Handle: RePEc:sdo:regaec:v:23:y:2014:i:4_11
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    File URL: http://www.usc.es/econo/RGE/Vol23/rge23411c.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    FDI; Exports; ASEAN; Error Correction Model; Cointegration; Causality.;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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