FDI Spillovers, Financial Markets, and Economic Growth： global empirical reinvestigate
Date Issued
2009
Date
2009
Author(s)
Huang, Yi-Ting
Abstract
Despite the desirable spillover effects brought by FDI, the exsisting literature indicates that the contribution to economic growth through spillovers is constrained by the host country’s absorbtive capacity. Among numerous factors affecting absorbtive capacity, the domestic financial market plays a crucial part in conveying spillovers with its direct connection to the channels through which spillover effects arise. This paper examines whether the interaction between FDI and financial markets can promote economic growth by using a panel data for 69 countries from 1980 to 2005. The empirical evidence shows that the growth effects through the interaction significantly differ from the period before and after the mid-90s. Only on the sample of the period before mid-90s can the interaction between FDI and financial markets benefit economic growth. In the full sample period, the interaction between FDI and financial markets can be still positively beneficial to growth when taking the factor of financial liberalization into consideration. Finally, the growth effects of the interaction have relative difference across different regions, which may be correlated with the factor of financial liberalization and other possible reasons.
Subjects
FDI
spillovers
financial markets
interaction
economic growth
financial liberalization
SDGs
Type
thesis
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