Foreign direct investment, financial development and economic growth in Asian developing countries
This research investigates the role of domestic financial development in enhancing the positive effects of foreign direct investment (hereafter, FDI) on economic growth in Asian developing countries. In other words, we examine whether countries with a better domestic financial system can utilize FDI...
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| Format: | Article |
| Language: | English |
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HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE
2012-08-01
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| Series: | Ho Chi Minh City Open University Journal of Science - Economics and Business Administration |
| Subjects: | |
| Online Access: | https://journalofscience.ou.edu.vn/index.php/econ-en/article/view/62 |
| _version_ | 1819107217781030912 |
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| author | Nguyen Van Phuc Nguyen Thuc Duy Anh |
| author_facet | Nguyen Van Phuc Nguyen Thuc Duy Anh |
| author_sort | Nguyen Van Phuc |
| collection | DOAJ |
| description | This research investigates the role of domestic financial development in enhancing the positive effects of foreign direct investment (hereafter, FDI) on economic growth in Asian developing countries. In other words, we examine whether countries with a better domestic financial system can utilize FDI more efficiently. The empirical analysis uses balanced panel data of 24 Asian developing countries in the period 1995-2009. This research applies the various models and techniques in panel data regression. Linear static models for panel data, including constant coefficients model or pooled regression model (POOLED), fixed effects regression model (FEM) and random effects regression model (REM) are employed. We analyze all models and employ several kinds of test including poolability test, Hausman test, LM test, fixed effects tests and Wald tests to select the most appropriated estimated model. The research findings show that FDI alone does not have direct effect on economic growth but does have when combined with financial development. Well-developed domestic financial markets promote the process of technological diffusion associated with FDI in Asian developing countries. Therefore, FDI and domestic financial development are complementary in increasing the rate of economic growth in the region. There is a threshold level of domestic financial development above which FDI starts to have positive impacts on economic growth. |
| first_indexed | 2024-12-22T02:50:32Z |
| format | Article |
| id | doaj.art-0b6b8529d67942d8b1a48c25f336f16d |
| institution | Directory Open Access Journal |
| issn | 2734-9314 2734-9586 |
| language | English |
| last_indexed | 2024-12-22T02:50:32Z |
| publishDate | 2012-08-01 |
| publisher | HO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCE |
| record_format | Article |
| series | Ho Chi Minh City Open University Journal of Science - Economics and Business Administration |
| spelling | doaj.art-0b6b8529d67942d8b1a48c25f336f16d2022-12-21T18:41:24ZengHO CHI MINH CITY OPEN UNIVERSITY JOURNAL OF SCIENCEHo Chi Minh City Open University Journal of Science - Economics and Business Administration2734-93142734-95862012-08-012131710.46223/HCMCOUJS.econ.en.2.1.62.201245Foreign direct investment, financial development and economic growth in Asian developing countriesNguyen Van Phuc0Nguyen Thuc Duy Anh1HCMC Open UniversityNetherlands Programme for M.A in Development Economics, University of Economics, Ho Chi Minh CityThis research investigates the role of domestic financial development in enhancing the positive effects of foreign direct investment (hereafter, FDI) on economic growth in Asian developing countries. In other words, we examine whether countries with a better domestic financial system can utilize FDI more efficiently. The empirical analysis uses balanced panel data of 24 Asian developing countries in the period 1995-2009. This research applies the various models and techniques in panel data regression. Linear static models for panel data, including constant coefficients model or pooled regression model (POOLED), fixed effects regression model (FEM) and random effects regression model (REM) are employed. We analyze all models and employ several kinds of test including poolability test, Hausman test, LM test, fixed effects tests and Wald tests to select the most appropriated estimated model. The research findings show that FDI alone does not have direct effect on economic growth but does have when combined with financial development. Well-developed domestic financial markets promote the process of technological diffusion associated with FDI in Asian developing countries. Therefore, FDI and domestic financial development are complementary in increasing the rate of economic growth in the region. There is a threshold level of domestic financial development above which FDI starts to have positive impacts on economic growth.https://journalofscience.ou.edu.vn/index.php/econ-en/article/view/62foreign direct investmentfinancial developmenteconomic growthpanel dataasia developing countries |
| spellingShingle | Nguyen Van Phuc Nguyen Thuc Duy Anh Foreign direct investment, financial development and economic growth in Asian developing countries Ho Chi Minh City Open University Journal of Science - Economics and Business Administration foreign direct investment financial development economic growth panel data asia developing countries |
| title | Foreign direct investment, financial development and economic growth in Asian developing countries |
| title_full | Foreign direct investment, financial development and economic growth in Asian developing countries |
| title_fullStr | Foreign direct investment, financial development and economic growth in Asian developing countries |
| title_full_unstemmed | Foreign direct investment, financial development and economic growth in Asian developing countries |
| title_short | Foreign direct investment, financial development and economic growth in Asian developing countries |
| title_sort | foreign direct investment financial development and economic growth in asian developing countries |
| topic | foreign direct investment financial development economic growth panel data asia developing countries |
| url | https://journalofscience.ou.edu.vn/index.php/econ-en/article/view/62 |
| work_keys_str_mv | AT nguyenvanphuc foreigndirectinvestmentfinancialdevelopmentandeconomicgrowthinasiandevelopingcountries AT nguyenthucduyanh foreigndirectinvestmentfinancialdevelopmentandeconomicgrowthinasiandevelopingcountries |