Does foreign direct investment cause long run economic growth? Evidence from the Latin America and the Caribbean countries

The empirical evidence about the temporal precedence between foreign direct investment (FDI) and economic growth in open developing economies is mixed. In this research effort, we explored the FDI-growth nexus for sixteen developing countries of Latin America and the Caribbean countries during the l...

Full description

Saved in:
Bibliographic Details
Published in:Applied econometrics and international development 2012-01, Vol.12 (1), p.93-106
Main Author: Oladipo, O S
Format: Article
Language:English
Subjects:
Argentina
Bolivia
Brazil
Causal analysis
Colombia
Costa Rica
Developing countries
Dominican Republic
Economic growth
Economic reform
Ecuador
El Salvador
Empirical research
Empirical tests
Financial reforms
Foreign direct investment
Guatemala
Jamaica
Long-term analysis
Mexico
Open economies
Peru
Trinidad and Tobago
Venezuela
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The empirical evidence about the temporal precedence between foreign direct investment (FDI) and economic growth in open developing economies is mixed. In this research effort, we explored the FDI-growth nexus for sixteen developing countries of Latin America and the Caribbean countries during the last three decades, a period in which many of these countries introduced various economic and financial reforms. In this analysis, we use the Granger non-causality test procedure recently developed by Toda and Yamamoto (1995), and Dolado and Lutkepohl (1996) -TYDL. Our results suggest that the null hypothesis, that 'FDI does not Granger-cause economic growth', is rejected for all countries except Dominican Republic, Trinidad and Tobago, and Jamaica. There is also evidence of unidirectional causality from growth to FDI for all countries except Bolivia, Colombia, Costa Rica, Dominican Republic, Ecuador, El Salvador, Guatemala, and Jamaica. We found bidirectional causality for Argentina, Brazil, Mexico, Peru and Venezuela. Reprinted by permission of EAAEDS: http://www.usc.es/economet.eaa.htm
ISSN:1578-4487