Relationship Between Fdi And Economic Growth

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Relationship between FDI and Economic Growth in Selected Asian Countries: A Panel Data Analysis
Dr. Nabila Asghar
Department of Economics, GC University, Faisalabad, PAKISTAN Cell: +300-4720706, E-mail: nabeelakhan83@gmail.com
Dr. Samia Nasreen
Department of Economics, GC University, Faisalabad, PAKISTAN Cell: +305-4023992, E-mail: sami.lcu@gmail.com
Prof. Dr. Hafeez ur Rehman (Corresponding author)
Department of Economics, University of the Punjab, Lahore-54590, PAKISTAN Tel: +92-42-99231167 Ext. 115, Cell: +300-4348225, E-mail: drhrehmankhan@gmail.com
Abstract: This study examines empirically the relationship between FDI and economic growth using heterogeneous panel for the period 1983-2008. The empirical findings of Larsson panel co-integration show that FDI and economic growth are cointegrated. FMOLS results reveal that FDI and economic growth are positively related to each other. The results of panel homogeneous causality hypothesis show the existence of bi-directional causality between FDI and economic growth while the results of panel homogeneous non-causality hypothesis confirm the existence of unidirectional causality running from FDI to economic growth in selected panel. The results of heterogeneous causality hypothesis show the existence of bi-directional causality between FDI and economic growth only in case of Malaysia. The existence of uni-directional causality running from FDI to economic growth is observed in cases of Nepal, Singapore, Japan and Thailand
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