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Endogenous Determination of FDI Growth and Economic Growth:The OECD Case

Author

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  • Burcu Türkcan

    () (Department of Economics, Izmir University of Economics)

  • I. Hakan Yetkiner

    () (Department of Economics, Izmir University of Economics)

Abstract

This paper tests the endogenous relationship between FDI growth and economic growth using a panel dataset for 23 OECD countries for the period 1975-2004. In particular we estimate a two-equation simultaneous equation system with the generalized methods of moments (GMM) that treats economic growth and FDI growth as endogenous variables. We find that FDI growth and economic growth are significant determinants of each other. We also find that export growth rate and human capital are statistically significant determinants of both FDI growth and economic growth. Our findings lead us to conclude that FDI growth and economic growth have an endogenous relationship.

Suggested Citation

  • Burcu Türkcan & I. Hakan Yetkiner, 2008. "Endogenous Determination of FDI Growth and Economic Growth:The OECD Case," Working Papers 0807, Izmir University of Economics.
  • Handle: RePEc:izm:wpaper:0807
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    References listed on IDEAS

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    1. Berthelemy, Jean-Claude & Demurger, Sylvie, 2000. "Foreign Direct Investment and Economic Growth: Theory and Application to China," Review of Development Economics, Wiley Blackwell, vol. 4(2), pages 140-155, June.
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    Cited by:

    1. Clark Don P. & Highfill Jannett & de Oliveira Campino Jonas & Rehman Scheherazade S., 2011. "FDI, Technology Spillovers, Growth, and Income Inequality: A Selective Survey," Global Economy Journal, De Gruyter, vol. 11(2), pages 1-44, July.
    2. Guido Baldi & Jakob Miethe, 2015. "Ausländische Direktinvestitionen und Wirtschaftswachstum," DIW Roundup: Politik im Fokus 71, DIW Berlin, German Institute for Economic Research.
    3. Fofana Mory Fodé, 2014. "The Influence of Measures of Economic Freedom on FDI: A Comparison of Western Europe and Sub-Saharan Africa," Global Economy Journal, De Gruyter, vol. 14(3-4), pages 1-26, October.

    More about this item

    Keywords

    FDI growth; economic growth; Panel Data; GMM;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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