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Causal Relationship between Foreign Direct Investment and Export: The Case of Developing Economies of Asia

Unal Arslan, Yildiz SAGLAM Celikoz and Arif Güzel
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Unal Arslan: Economics Departmant, Mustafa Kemal University Tayfur Sokmen Kampusu; Serinyol/Turkey
Yildiz SAGLAM Celikoz: Economics Departmant, Mustafa Kemal University Tayfur Sokmen Kampusu; Serinyol/Turkey

Asian Economic and Financial Review, 2018, vol. 8, issue 4, 537-551

Abstract: Utilizing annual data from 1980-2015 for 19 developing economies of Asia, this study examines the causality relation between foreign direct investment and exports. According to the first part of Granger Causality results, China, Republic of Korea, Indonesia, Singapore and Turkey has causality from export to FDI at 1% significance level. Nepal, Sri Lanka, Philippines, Thailand and Oman has a causality from export to FDI at 5% significance level. Finally, it is possible to say that Bangladesh and India has a causality from export to FDI at 10% significance level, while the likelihood value is very close to the 5% significance value. According to the second part of the Granger causality relationship tests Sri Lanka, Indonesia and Turkey has a causality from FDI to export at 1% significance level, India, Nepal and Thailand has a causality from FDI to export at 5% significance level. Finally, the existence of a causality relationship from FDI to Export was found at 10% significance level in Hong Kong, Bangladesh, Singapore, Bahrain, Oman and Saudi Arabia. Briefly export led growth hypothesis is valid for developing economies of Asian countries.

Keywords: Foreign direct investment; Export; Long-run causality; Cross-section dependence; Slope heterogeneity. (search for similar items in EconPapers)
JEL-codes: F10 F21 F23 (search for similar items in EconPapers)
Date: 2018
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