Re-examining foreign direct investment, exports, and economic growth in asian economies using a bootstrap ARDL test for cointegration

Soo Khoon Goh, Chung Yan Sam and Robert McNown

Journal of Asian Economics, 2017, vol. 51, issue C, 12-22

Abstract: This paper examines whether there is a long-run relationship among foreign direct investment (FDI), exports, and gross domestic product (GDP) in selected Asian economies. We use a newly developed cointegration test, the bootstrap autoregressive distributed lag (ARDL), to examine this long-run relationship. The motivation for using the bootstrap methodology is to generate and apply critical values for the ARDL test that are valid and appropriate for the specific data sets used. Further, the bootstrap tests allow for endogeneity and feedback that may exist. Pesaran et al. (2001) highlighted the possibility of degenerate cases, but empirical studies in general ignore these and may conclude that cointegration exists when it does not. Our tests fail to find evidence of cointegration when GDP is the dependent variable. The absence of a long-run forcing relation from FDI and exports to GDP implies that FDI and exports were not the sole sources of economic growth in our selected Asian economies.

Keywords: FDI; Exports; Economic growth; Asia; Bootstrap ARDL (search for similar items in EconPapers)
JEL-codes: C15 O11 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (61)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:51:y:2017:i:c:p:12-22

DOI: 10.1016/j.asieco.2017.06.001

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