Population Aging and FDI inflows: A multi-country cointegration analysis

Rajarshi Mitra (), Md. Thasinul Abedin () and Kanon Sen ()
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Rajarshi Mitra: Tokyo International University
Md. Thasinul Abedin: University of Chittagong
Kanon Sen: Jahangirnagar University

Economics Bulletin, 2022, vol. 42, issue 3, 1631 - 1644

Abstract: The neoclassical theory posits an inverse relationship between population ageing and FDI inflows. We investigate the short-run and long-run relationships between population ageing and net FDI inflows (% of GDP) for 20 OECD countries, controlling for real national income, real exchange rate, trade openness and domestic investment. The autoregressive distributed lag (ARDL) bounds testing approach to cointegration is applied. In contrast to the neoclassical proposition, the long-run effects of population ageing on net FDI inflows (% of GDP) are found to be country-specific. The effects are significantly negative for Australia, Austria, Costa Rica, Denmark, Finland, Spain and Sweden; significantly positive for Colombia, Germany, Greece, Italy, Japan, Norway and Portugal, and insignificant for Belgium, Chile, France, Mexico, the UK and the USA.

Keywords: Bounds Testing; Cointegration; Demography; FDI; OECD (search for similar items in EconPapers)
JEL-codes: F4 J1 (search for similar items in EconPapers)
Date: 2022-09-30
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