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The Impact of Trade Openness, Foreign Direct Investment and Domestic Investment on Economic Growth: New Evidence from Asian Developing Countries

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  • Bakari, Sayef
  • Sofien, Tiba

Abstract

The objective of this paper is to examine the impact of openness, foreign investment inflows, and domestic investment on economic growth for the case of 24 Asian economies over the time span 2002-2017 through the use of the fixed and random effect models. Our empirical results pointed out that domestic investment positively influences economic growth. However, we found that foreign direct investment and exports are negatively affecting the growth path. Also, the population, imports, and final consumption expenditure have no real impact on economic growth. Due to the importance of the positive externalities linked to the trade openness and foreign direct investments inflow, in terms of technology transfer bias, financial capacities, human expertise, large markets size, and spillover effect added to the domestic capacities and the national investment, the pace of the phenomenal economic performance of the Asian economies is very well justified.

Suggested Citation

  • Bakari, Sayef & Sofien, Tiba, 2019. "The Impact of Trade Openness, Foreign Direct Investment and Domestic Investment on Economic Growth: New Evidence from Asian Developing Countries," MPRA Paper 94489, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:94489
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    10. Kahouli, Bassem & Maktouf, Samir, 2015. "The determinants of FDI and the impact of the economic crisis on the implementation of RTAs: A static and dynamic gravity model," International Business Review, Elsevier, vol. 24(3), pages 518-529.
    11. Solarin, Sakiru Adebola & Shahbaz, Muhammad, 2015. "Natural gas consumption and economic growth: The role of foreign direct investment, capital formation and trade openness in Malaysia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 835-845.
    12. Kahouli, Bassem & Omri, Anis, 2017. "Foreign direct investment, foreign trade and environment: New evidence from simultaneous-equation system of gravity models," Research in International Business and Finance, Elsevier, vol. 42(C), pages 353-364.
    13. Bakari, Sayef & Mabrouki, Mohamed, 2018. "The Impact of Agricultural Trade on Economic Growth in North Africa: Econometric Analysis by Static Gravity Model," MPRA Paper 85116, University Library of Munich, Germany.
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    Cited by:

    1. Mkadmi, Jamel Eddine & Bakari, Sayef & Othmani, Ameni, 2021. "The Impact of Tax Revenues and Domestic Investments on Economic Growth in Tunisia," MPRA Paper 108387, University Library of Munich, Germany.
    2. Sayef Bakari & Sofien Tiba, 2022. "Agricultural Exports, Agricultural Imports And Economic Growth In China," Journal of Smart Economic Growth, , vol. 7(3), pages 35-61, September.
    3. Bakari, Sayef & Fakraoui, Nissar & Mabrouki, Mohamed, 2020. "The Contribution of Domestic Investment, Exports and Imports on Economic Growth: A Case Study of Peru," MPRA Paper 99041, University Library of Munich, Germany.
    4. Sayef Bakari & Sofien Tiba & Nissar Fakraoui, 2019. "Does Domestic Investment Contribute To Economic Growth In Uruguay? What Did The Empirical Facts Say?," Journal of Smart Economic Growth, , vol. 4(2), pages 53-69, September.
    5. Bakari, Sayef & El Weriemmi, Malek, 2022. "Causality between Domestic Investment and Economic Growth in Arab Countries," MPRA Paper 113079, University Library of Munich, Germany.
    6. Bakari, Sayef, 2021. "The nexus between domestic investment and economic growth in G7 countries; Does internet matter?," MPRA Paper 108383, University Library of Munich, Germany.
    7. Bakari, Sayef, 2022. "The Nexus between Domestic Investment and Economic Growth in Developed Countries: Do Exports matter?," MPRA Paper 114394, University Library of Munich, Germany.
    8. Sayef Bakari & Nissar Fakraoui & Sofien Tiba, 2021. "Domestic Investment, Export, Import And Economic Growth In Brazil: An Application Of Vector Error Correction Model," Journal of Smart Economic Growth, , vol. 6(1), pages 31-48, Mars.
    9. Peñaranda Molina, Diego Andrés, 2021. "Determinantes de la diversificación de exportaciones en Sudamérica: un análisis con datos de panel," Documentos de trabajo 3/2021, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana.
    10. Stephen Taiwo Onifade & Abdul Qahar Khatir & Ahmet Ay & Murat Canitez, 2022. "Reviewing the Trade Openness, Domestic Investment, and Economic Growth Nexus: Contemporary Policy Implications for the MENA Region," Revista Finanzas y Politica Economica, Universidad Católica de Colombia, vol. 14(2), pages 489-512, June.
    11. Bakari, Sayef, 2022. "The Impact of Digitalization and Patent on Economic Growth in Romania," MPRA Paper 113951, University Library of Munich, Germany.
    12. Nadia Ben Yedder & Malek El Weriemmi & Sayef Bakari, 2023. "The Impact of Domestic Investment and Trade on Economic Growth in North Africa Countries: New Evidence from Panel CS-ARDL Model," EuroEconomica, Danubius University of Galati, issue 2(42), pages 22-41, November.
    13. Najeh Bouchoucha & Sayef Bakari, 2021. "The Impacts Of Domestic And Foreign Direct Investments On Economic Growth: Fresh Evidence From Tunisia," Journal of Smart Economic Growth, , vol. 6(1), pages 83-102, Mars.
    14. Chibalamula, Haggai Chibale & Evans, Yeboah & Kachelo, Mukuka & Bamwesigye, Dastan, 2023. "The Effect of Foreign Direct Investment and Trade Openness on Economic Growth: Evidence from Five African Countries," AGRIS on-line Papers in Economics and Informatics, Czech University of Life Sciences Prague, Faculty of Economics and Management, vol. 15(1), January.
    15. Bakari, Sayef & El Weriemmi, Malek & Mabrouki, Mohamed, 2022. "The Impact of Digitalization and Trade Openness on Economic Growth: New Evidence from Richest Asian Countries," MPRA Paper 113816, University Library of Munich, Germany.
    16. Deimante Blavasciunaite & Lina Garsviene & Kristina Matuzeviciute, 2020. "Trade Balance Effects on Economic Growth: Evidence from European Union Countries," Economies, MDPI, vol. 8(3), pages 1-15, July.
    17. Bakari, Sayef, 2021. "Reinvest the relationship between exports and economic growth in African countries: New insights from innovative econometric methods," MPRA Paper 108785, University Library of Munich, Germany.

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    More about this item

    Keywords

    Trade openness; FDI; Domestic Investment; Economic Growth.;
    All these keywords.

    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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