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FDI and Growth: a Causal Relationship

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  • Abdur Chowdhury
  • George Mavrotas

Abstract

The paper examines the causal relationship between FDI and economic growth by using an innovative econometric methodology to study the direction of causality between the two variables. We apply our methodology, based on the Toda-Yamamoto test for causality, to time-series data covering the period 1969-2000 for three developing countries, namely Chile, Malaysia and Thailand, all of them major recipients of FDI with a different history of macroeconomic episodes, policy regimes and growth patterns.

Suggested Citation

  • Abdur Chowdhury & George Mavrotas, 2005. "FDI and Growth: a Causal Relationship," WIDER Working Paper Series RP2005-25, World Institute for Development Economic Research (UNU-WIDER).
    • Handle: RePEc:unu:wpaper:rp2005-25
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    File URL: https://www.wider.unu.edu/sites/default/files/rp2005-25.pdf
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