World Economy · 2006 · 636 citations · 29 references
Social SciencesDevelopment StudiesEconomicsDevelopment EconomicsEconomic DevelopmentForeign Direct InvestmentEconomic GrowthFdi DeterminantsGrowth TheoryInvestmentPanel Data AnalysisPanel Data MethodsCausal RelationshipsCausalityForeign Direct Investment AnalysisPanel Data Causal InferencePanel Data EstimationPanel Data RegressionPanel Regression ModelsPanel Time Series Models
The study analyzes Granger causal relationships between FDI and GDP across 31 developing countries over 31 years. The analysis reveals bi‑directional causality between the FDI‑to‑GDP ratio and GDP, with FDI exerting a lasting impact on GDP but not the reverse, suggesting that FDI drives growth through knowledge transfer and technology adoption.
We analyse the Granger causal relationships between foreign direct investment (FDI) and GDP in a sample of 31 developing countries covering 31 years. Using estimators for heterogeneous panel data we find bi-directional causality between the FDI-to-GDP ratio and the level of GDP. FDI has a lasting impact on GDP, while GDP has no long-run impact on the FDI-to-GDP ratio. In that sense FDI causes growth. Furthermore, in a model for GDP and FDI as a fraction of gross capital formation (GCF) we also find long-run effects from FDI to GDP. This finding may be interpreted as evidence in favour of the hypotheses that FDI has an impact on GDP via knowledge transfers and adoption of new technology.
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Statistical analysis of cointegration vectors
Søren Johansen · Journal of Economic Dynamics and Control · 1988 · 16.8K citations
Business, Economics, Econometrics +13