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Foreign direct investment and its determinants: A regional panel causality analysis

Author

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  • Chan, M.W. Luke
  • Hou, Keqiang
  • Li, Xing
  • Mountain, Dean C.

Abstract

Moving beyond traditional one- or possibly two-way causality involving foreign direct investment (FDI), a systematic approach is implemented for delineating both short- and long-run flows of causality involving FDI and a comprehensive set of FDI's possible determinants. Granger causality procedures incorporating error correction terms are implemented, using provincial panel data from China. In both the short and long run, growth in GDP directly influences FDI, while growth in local infrastructure and local investment provide indirect but not direct influence.

Suggested Citation

  • Chan, M.W. Luke & Hou, Keqiang & Li, Xing & Mountain, Dean C., 2014. "Foreign direct investment and its determinants: A regional panel causality analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 54(4), pages 579-589.
    • Handle: RePEc:eee:quaeco:v:54:y:2014:i:4:p:579-589
    DOI: 10.1016/j.qref.2013.07.004
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