Next Article in Journal
Blockchain Economical Models, Delegated Proof of Economic Value and Delegated Adaptive Byzantine Fault Tolerance and their implementation in Artificial Intelligence BlockCloud
Next Article in Special Issue
Enhancing Financial Inclusion in ASEAN: Identifying the Best Growth Markets for Fintech
Previous Article in Journal
The Effects of Environmental Regulation on the Singapore Stock Market
Previous Article in Special Issue
Corporate Social Responsibility and SMEs in Vietnam: A Study in the Textile and Garment Industry
Open AccessArticle

Foreign Direct Investment and Economic Growth in the Short Run and Long Run: Empirical Evidence from Developing Countries

1
AMV Business Advisory and Training, Ho Chi Minh City 70000, Vietnam
2
Business and Economics Research Group, Ho Chi Minh City Open University, Ho Chi Minh City 70000, Vietnam
*
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2019, 12(4), 176; https://doi.org/10.3390/jrfm12040176
Received: 30 June 2019 / Revised: 28 August 2019 / Accepted: 11 September 2019 / Published: 25 November 2019
(This article belongs to the Special Issue Contemporary Issues in Business and Economics)
A contribution of foreign direct investment to economic growth is possibly one of the widely examined topics in academic research in the last five decades. However, few studies have examined both the short run and long run impacts of this effect concurrently for developing and emerging markets, in particular during the period of economic turmoil that includes the global financial crisis. As such, this paper examines and provides additional and relevant quantitative evidence on the impact of foreign direct investment (FDI) on economic growth, both in the short run and the long run in developing countries of the lower-middle-income group in 2000–2014. Various econometric methods are employed such as the panel-based unit root test, Johansen cointegration test, Vector Error Correction Model (VECM), and Fully Modified OLS (FMOLS) to ensure the robustness of the findings. The results of this study show that FDI helps stimulate economic growth in the long run, although it has a negative impact in the short run for the countries in this study. Other macroeconomic factors also play an important role in explaining economic growth in these countries. Money supply has a positive effect on growth in the short run while total credit for private sector has a negative effect. In addition, long-run economic growth is driven by money supply, human capital, total domestic investment, and domestic credit for the private sector. Based on these results, recommendations for the governments of these countries have been developed. View Full-Text
Keywords: foreign direct investment (FDI); economic growth; endogenous growth; developing countries foreign direct investment (FDI); economic growth; endogenous growth; developing countries
MDPI and ACS Style

Dinh, T. .-H.; Vo, D.H.; The Vo, A.; Nguyen, T.C. Foreign Direct Investment and Economic Growth in the Short Run and Long Run: Empirical Evidence from Developing Countries. J. Risk Financial Manag. 2019, 12, 176.

Show more citation formats Show less citations formats
Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

Article Access Map by Country/Region

1
Back to TopTop