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Liberalization, FDI and growth in developing countries : a panel cointegration approach.

Basu, P. and Chakraborty, C. and Reagle, D. (2003) 'Liberalization, FDI and growth in developing countries : a panel cointegration approach.', Economic inquiry., 41 (3). pp. 510-516.

Abstract

Using a panel cointegration framework, the article explores the two-way link between FDI and growth for a panel of 23 developing countries. In addition, it investigates the impact of liberalization on the dynamics of the FDI and GDP relationship. A long-run cointegrating relationship is found between FDI and GDP after allowing for heterogeneous country effects. The cointegrating vectors reveal a bidirectional causality between GDP and FDI for more open economies. For relatively closed economies, long-run causality appears unidirectional and runs from GDP to FDI, implying that growth and FDI are not mutually reinforcing under restrictive trade and investment regimes.

Item Type:Article
Full text:Full text not available from this repository.
Publisher Web site:http://dx.doi.org/10.1093/ei/cbg024
Record Created:20 Feb 2008
Last Modified:03 Mar 2010 15:31

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