Foreign direct investment and its determinants: A regional panel causality analysis |
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| Authors: | M.W. Luke Chan Keqiang Hou Xing Li Dean C. Mountain |
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| Affiliation: | 1. DeGroote School of Business, McMaster University, Canada;2. School of Finance, Shanghai University of Finance and Economics, China;3. School of International Economics and Business, Nanjing University of Finance and Economics, China |
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| 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. |
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| Keywords: | Foreign direct investment Granger causality Error correction terms Panel data China |
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