Do export, financial development, and institutions affect FDI outflows? Insights from Asian developing countries

• Main Authors: Pragyanrani BEHERA, Prajukta TRIPATHY, Bikash Ranjan MISHRA
• Format: Article
• Language: English
• Published: General Association of Economists from Romania 2020-06-01
• Series: Theoretical and Applied Economics
• Subjects: ofdi; export; financial development; institutions; panel data
• Online Access: http://store.ectap.ro/articole/1460.pdf
• ISSN: 1841-8678; 1844-0029

Focussing on the importance of FDI outflows (OFDI) from Asian developing countries, this study examines the impact of export, institutions and financial development on OFDI. Using a balanced panel of 10 Asian developing countries during 2002-2016, this study employs the Pooled Mean Group (PMG) cointegration test and Granger causality test of Dumitrescu and Hurlin (2012) to explore the long-run causal relationship. To validate the results robustness test is conducted. Overall, the findings show that improvement in institutions encourages OFDI in the short-run, but it impedes more OFDI in the long-run. The financial development and export are positively related to OFDI in the long-run. The Granger causality test confirms that there is a unidirectional causality that runs from the quality of institutions and financial development to OFDI, while OFDI induces more export.