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Re-examining foreign direct investment, exports, and economic growth in asian economies using a bootstrap ARDL test for cointegration

Author

Listed:
  • Goh, Soo Khoon
  • Sam, Chung Yan
  • McNown, Robert

Abstract

This paper examines whether there is a long-run relationship among foreign direct investment (FDI), exports, and gross domestic product (GDP) in selected Asian economies. We use a newly developed cointegration test, the bootstrap autoregressive distributed lag (ARDL), to examine this long-run relationship. The motivation for using the bootstrap methodology is to generate and apply critical values for the ARDL test that are valid and appropriate for the specific data sets used. Further, the bootstrap tests allow for endogeneity and feedback that may exist. Pesaran et al. (2001) highlighted the possibility of degenerate cases, but empirical studies in general ignore these and may conclude that cointegration exists when it does not. Our tests fail to find evidence of cointegration when GDP is the dependent variable. The absence of a long-run forcing relation from FDI and exports to GDP implies that FDI and exports were not the sole sources of economic growth in our selected Asian economies.

Suggested Citation

  • Goh, Soo Khoon & Sam, Chung Yan & McNown, Robert, 2017. "Re-examining foreign direct investment, exports, and economic growth in asian economies using a bootstrap ARDL test for cointegration," Journal of Asian Economics, Elsevier, vol. 51(C), pages 12-22.
    • Handle: RePEc:eee:asieco:v:51:y:2017:i:c:p:12-22
    DOI: 10.1016/j.asieco.2017.06.001
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    More about this item

    Keywords

    FDI; Exports; Economic growth; Asia; Bootstrap ARDL;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General

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