Relationship between foreign direct investment and global economic growth: panel data

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Published: jul. 15, 2020
Keywords:
IED, Economic growth, Panel data

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Andrea Agurto
Universidad Nacional de Loja
Alejandra Castro
Universidad Nacional de Loja
Iván Cartuche
Universidad Nacional de Loja

Abstract

The present investigation aims to verify the contribution of FDI on economic growth for 106 countries globally during the period 1991 to 2015. Based on empirical evidence, using econometrics of panel data obtained fromtheWorld Develompment Indicators of theWorld Bank (2017), and cointegration techniques. The results indicate the existence of a short and long termcointegration vector between both variables. We estimate the strength of the cointegration vector for individual countries through a Dynamic Ordinary Least Squaresmodel (DOLS) for groups of countries that use a Dynamic Panel model with Ordinary Least Squares (PDOLS). To verify the direction of causality between the series, we applied the evidence of Dumitrescu & Hurlin (2012), revealing unidirectional causality of economic growth towards direct foreign investment for high-income countries. Alleging the increase in the growth of the economies in the countries of study, they are due to other determining factors. Possible economic policy involvement for HIC, improve trade agreements between local and international companies, the objective is to take full advantage of the economic benefits generated by FDI.

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How to Cite
Agurto, A., Castro, A., & Cartuche, I. (2020). Relationship between foreign direct investment and global economic growth: panel data. Revista Económica, 5(1), 35–46. Retrieved from https://revistas.unl.edu.ec/index.php/economica/article/view/770
Issue
Vol. 5 No. 1 (2018): Revista Económica vol 5 (Julio-Diciembre 2018)
Section
RESEARCH ARTICLES
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