Threshold and Asymmetric Effect of Foreign Direct Investment (FDI) on Economic Growth in Selected Countries of OPEC and OECD (in Persian)

Ghodratollah Emamverdi () and Zahra Boland-Ghamat
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Ghodratollah Emamverdi: Assistant Professor, Department of Economics, Islamic Azad University Central Branch, Tehran, Iran.
Zahra Boland-Ghamat: M.A. in Economics, Islamic Azad University Central Branch, Tehran, Iran.

The Journal of Planning and Budgeting (٠صلنامه برنامه ریزی و بودجه), 2019, vol. 23, issue 4, 113-135

Abstract: The main purpose of this study is to assess the effect of Foreign Direct Investment on economic growth of studied countries by taking into account the asymmetric effects of financial development on the economic growth and by determining the possible threshold. For this purpose, 12 countries have been chosen from OPEC and 15 countries from OECD countries. At first, balanced panel threshold regression has been applied to evaluate hypotheses of this study. In accordance with the obtained threshold values and statistical significance test of these thresholds, it was approved that there was a non-linear and asymmetric relationship between effects of FDI and economic growth. Furthermore, the Balanced Panel method with fixed effect has been estimated during the studied period in order to assess the effect of FDI on economic growth using the estimation method of GMM. The results show that the effect of FDI on the economic growth of OPEC countries has been low due to their lack of financial development; Also, this effect not only has been decreasing investment in the countries with financial development index lower than the first threshold but also has led to weak performance and reduced economic growth. OECD countries have better financial deepening so that FDI has had a positive and significant effect on economic growth at all thresholds.

Keywords: Foreign Direct Investment (FDI); Financial Development; Economic Growth; Balanced Panel Threshold Regression Model; Asymmetric Effect. (search for similar items in EconPapers)
JEL-codes: C23 F21 K23 M21 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:auv:jipbud:v:23:y:2019:i:4:p:113-135

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