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Spatial Estimation of the Nexus between the PRC’s Foreign Direct Investment and ASEAN’s Growth

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  • Uttama, Nathapornpan Piyaareekul

    (Asian Development Bank Institute)

Abstract

Forging closer economic relations between the People’s Republic of China (PRC) and the Association of Southeast Asian Nations (ASEAN) over the last 2 decades has contributed to building a stronger ASEAN economy. It is particularly important to know how the PRC’s foreign direct investment responds to ASEAN’s economic performance. This study investigates the causal relationship between the PRC’s foreign direct investment and economic growth among the 10 ASEAN member countries from 1995 to 2013. Panel unit root tests, a spatial panel vector autoregressive model, and spatial Granger causality are employed as empirical techniques for spatial panel estimation. The empirical results reveal that the PRC’s direct investment in ASEAN caused economic growth in ASEAN, and economic growth in ASEAN resulted in the PRC’s direct investment in ASEAN. This finding raises potentially interesting external investment policy implications.

Suggested Citation

  • Uttama, Nathapornpan Piyaareekul, 2016. "Spatial Estimation of the Nexus between the PRC’s Foreign Direct Investment and ASEAN’s Growth," ADBI Working Papers 597, Asian Development Bank Institute.
  • Handle: RePEc:ris:adbiwp:0597
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    More about this item

    Keywords

    foreign direct investment; direct investment; investment; the People’s Republic of China; Association of Southeast Asian Nations; economic growth;

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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