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The interaction between FDI, output and the spillover variables: co-integration and VAR analyses for APEC, 1965-1999

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  • A. Bende-Nabende
  • J. L. Ford
  • B. Santoso
  • S. Sen

Abstract

In this empirical study, it is considered whether FDI has directly induced long-run effects on output in a selection of East Asian countries or whether such an influence, if any, has been transmitted indirectly through spillover effects. The Johansen cointegration methodology and resultant VECs are employed, and the use of that methodology within a panel framework tested. Equal evidence of negative and positive direct significant long-run relationship between FDI and output in the countries is found in the sample. In addition, indirect spillovers effects are found, which are positive for some country variables and negative for others. There is also an indication that the statistically significant positive spillovers occur in the economically less developed countries.

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  • A. Bende-Nabende & J. L. Ford & B. Santoso & S. Sen, 2003. "The interaction between FDI, output and the spillover variables: co-integration and VAR analyses for APEC, 1965-1999," Applied Economics Letters, Taylor & Francis Journals, vol. 10(3), pages 165-172.
    • Handle: RePEc:taf:apeclt:v:10:y:2003:i:3:p:165-172
    DOI: 10.1080/1350485022000044057
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    1. Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
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    1. Paula Neto & António Brandão & António Cerqueira, 2008. "The Impact of FDI, Cross Border Mergers and Acquisitions and Greenfield Investments on Economic Growth," FEP Working Papers 291, Universidade do Porto, Faculdade de Economia do Porto.
    2. Alaya MAROUANE & Dalila NICET-CHENAF & Eric ROUGIER, 2008. "The law of growth and attraction: an endogenous model of absorptive capacities, FDI and income for MENA countries," Cahiers du GREThA (2007-2019) 2008-27, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    3. Benzaim, Samia & Ftiti, Zied & Khedhaouria, Anis & Djermane, Rebai, 2023. "US foreign investments: Technology transfer, relative backwardness, and the productivity growth of host countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 275-295.
    4. J L Ford & S Sen & Hongxu Wei, 2010. "FDI and Economic Development in China 1970-2006: A Cointegration Study," Discussion Papers 10-24, Department of Economics, University of Birmingham.
    5. Franco, Chiara, 2013. "Exports and FDI motivations: Empirical evidence from U.S. foreign subsidiaries," International Business Review, Elsevier, vol. 22(1), pages 47-62.
    6. C. Franco, 2009. "Exports and FDI motivations: empirical evidence from US foreign subsidiaries," Working Papers 687, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Akinlo Taiwo & Simon-Oke O. Olayemi, 2015. "Re-examine foreign direct investment and economic growth: Panel co-integration and causality tests for sub-Saharan African countries," International Area Studies Review, Center for International Area Studies, Hankuk University of Foreign Studies, vol. 18(1), pages 73-86, March.
    8. Effiom, Lionel & Etim Edet, Samuel, 2019. "Facilitation Of Foreign Direct Investment: Evidence From Cross River State, Nigeria," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 8(2), pages 75-95, September.
    9. Uddin, Mirza Md Moyen & Sharif, Taimur & Islam, Abe Reza Mohammad & Abedin, Mohammad Zoynul, 2024. "Moderating impact of FDI on the growth-environment nexus in the pre-COVID-19 eras," Research in International Business and Finance, Elsevier, vol. 67(PA).
    10. Sule, Abubakar & Mohammed, Ibrahim Danlami & Ebeh, Eleojo Joy, 2023. "Foreign Direct Investment, Trade Openness and Economic Performance in Nigeria: Does Governance Quality Matter?," African Journal of Economic Review, African Journal of Economic Review, vol. 11(3), June.
    11. Sbia, Rashid & Shahbaz, Muhammad & Hamdi, Helmi, 2014. "A contribution of foreign direct investment, clean energy, trade openness, carbon emissions and economic growth to energy demand in UAE," Economic Modelling, Elsevier, vol. 36(C), pages 191-197.
    12. Nedra Baklouti & Younes Boujelbene, 2016. "Foreign Direct Investment-Economic Growth Nexus," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 2(12), pages 136-145, April.
    13. Kakran, Shubham & Kumari, Vineeta & Bajaj, Parminder Kaur & Sidhu, Arpit, 2024. "Exploring crisis-driven return spillovers in APEC stock markets: A frequency dynamics analysis," The Journal of Economic Asymmetries, Elsevier, vol. 29(C).
    14. Sin-Yu Ho, 2018. "Analysing the sources of growth in an emerging market economy: the Thailand experience," International Journal of Sustainable Economy, Inderscience Enterprises Ltd, vol. 10(4), pages 340-359.
    15. Dalila Nicet-Chenaf & Eric Rougier, 2009. "FDI and growth: a new look at a still puzzling issue," Post-Print hal-00798473, HAL.
    16. Li, Xiaoying & Liu, Xiaming, 2005. "Foreign Direct Investment and Economic Growth: An Increasingly Endogenous Relationship," World Development, Elsevier, vol. 33(3), pages 393-407, March.
    17. Shu Chen Chang, 2007. "The interactions among foreign direct investment, economic growth, degree of openness and unemployment in Taiwan," Applied Economics, Taylor & Francis Journals, vol. 39(13), pages 1647-1661.
    18. Ranjan Dash & P. Parida, 2013. "FDI, services trade and economic growth in India: empirical evidence on causal links," Empirical Economics, Springer, vol. 45(1), pages 217-238, August.
    19. Sebastian-Andrei LABES, 2015. "Fdi Determinants In Brics," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7(2), pages 296-308, August.
    20. Liu, Jiahao & Zhu, Bo & Hu, Xin, 2024. "Systemic risk spillovers among global energy firms: Does geopolitical risk matter?," Energy Economics, Elsevier, vol. 140(C).
    21. Sin-Yu Ho & Bernard Njindan Iyke, 2020. "The Determinants of Economic Growth in Ghana: New Empirical Evidence," Global Business Review, International Management Institute, vol. 21(3), pages 626-644, June.
    22. Mohamed Masry, 2015. "Does Foreign Direct Investment (FDI) Really Matter in Developing Countries? The Case of Egypt," Research in World Economy, Research in World Economy, Sciedu Press, vol. 6(4), pages 64-77, December.

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