Foreign Direct Investment, Economic Growth, and Economic Freedom：A Panel Analysis of 12 Asian Countries

• Main Authors: Yu-Fun Chang, 張尤芳
• Other Authors: none
• Format: Others
• Language: zh-TW
• Published: 2011
• Online Access: http://ndltd.ncl.edu.tw/handle/73553744704592801151

碩士 === 逢甲大學 === 財稅所 === 99 === This paper investigates the effects of economic growth and economic freedom on foreign direct investment using panel data analysis for 12 Asian Countries, including China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam over the period 1995-2009. This paper also classified “All countries”to “Good Government Governance Countries”（including Hong Kong, Japan, Korea, Malaysia, Singapore and Taiwan）and “Bad Government Governance Countries”（including China, India, Indonesia, Philippines, Thailand, and Vietnam）according to the Governance Indicator from the World Bank. The purpose of this paper is to investigate whether the effects economic growth and economic freedom on foreign direct investment are different for different government governance countries. The empirical results suggest as follows： （i）in the group of All countries: The Panel vector autoregression model is employed. The early economic growth has a nonsignificant negative effect on current foreign direct investment, early economic freedom has a significant positive effect on current foreign direct investment, and current government governance has a significant negative effect on current foreign direct investment. （ii）in the group of good Government Governance countries: The Panel error vector correction model is employed. Foreign direct investment has stable equilibrium relationships with economic growth and economic freedom in the long run. Early economic growth and early economic freedom both have a nonsignificant negative effect on current foreign direct investment in the short run. （iii）in the group of bad Government Governance countries: The Panel vector autoregression model is employed. Early economic growth has a significant positive effect on current foreign direct investment and early economic freedom has a significant negative effect on current foreign direct investment. To sum up, when the government is at the situation of bad governance, early economic growth and early economic freedom have a significant positive effect and a negative effect on current foreign direct investment, respectively. When the government is at the situation of good governance, early economic growth and early economic freedom have nonsignificant negative effects on current foreign direct investment in the short run. Foreign direct investment has a stable equilibrium relationship with economic growth and economic freedom in the long run. The results imply that the effects of economic growth and economic freedom on foreign direct investment are different for the different government governance countries.