Economic growth and foreign direct investment and its incidence on inequality worldwide: a cointegration and causality approach in panel data

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Published: mar. 19, 2022
DOI: https://doi.org/10.54753/rve.v10i1.1295

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Andrea Salinas
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador
Bryan Tillaguango
Carrera de Economía, Universidad Nacional de Loja, Loja, Ecuador

Abstract

The objective of this research is to analyze the link between the Gini Index, economic growth and foreign direct investment (FDI) in 100 countries worldwide, period 1980-2015. Panel data cointegration techniques were implemented, such as the Pedoni (1999) cointegration models that evaluate the long term, while the Westerlund (2007) cointegration test was implemented for the short term. Likewise, to obtain the strength of the cointegration vector, Dynamic Ordinary Least Squares (DOLS) and Dynamic Ordinary Least Squares (PDOLS) models were used. In the case of causality, the test proposed by Dumitrescu /& Hurlin (2012) was implemented. The results of the cointegration tests show us that the Gini Index, economic growth and FDI have a joint movement in the short and long term. The PDOLS and DOLS models show that the cointegration vector between the Gini Index and economic growth is stronger in LMICs and LMICs. On the other hand, the causality results of Dumitrescu & Hurlin (2012) confirm the existence of bidirectional causality between inequality and gross domestic product in lower-middle-income countries (LMICs).

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How to Cite
Salinas, A., & Tillaguango, B. . (2022). Economic growth and foreign direct investment and its incidence on inequality worldwide: a cointegration and causality approach in panel data. Revista Económica, 10(1), 87–99. https://doi.org/10.54753/rve.v10i1.1295
Issue
Vol. 10 No. 1 (2022): RVE Vol 10 (January - June 2022)
Section
RESEARCH ARTICLES
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