The Nexus of Outward Foreign Direct Investment and Income: Evidence from Singapore

Chew Ging Lee

Applied Econometrics and International Development, 2010, vol. 10, issue 1

Abstract: This paper examines the relationship between economic growth and outward foreign direct investment (FDI) in Singapore with cointegration and Granger causality analyses. Although we find gross domestic product (GDP) per capita and outward FDI are cointegrated, there is no evidence of long run causality between these two variables because the coefficient of error correction term is either statistically insignificant or with wrong sign. With the standard Granger causality test, the results indicate that increased outward FDI leads to higher GDP per capita, but higher GDP per capita actually leads to a decline in outward FDI.

Keywords: Granger Causality; Outward FDI; Income (search for similar items in EconPapers)
JEL-codes: F20 O10 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (6)

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