GROWTH AND FDI
A.K.Tiwari(2011) conducted an empirical analysis in the framework of a panel for 23 Asian countries by employing data from 1986 to 2008. He also incorporated a two-way effect model for the analysis, as the assumptions of fixed and random effects across countries and over time are extremely plausible. He also
examined nonlinearities associated with exports and FDI in the economic growth of Asian countries. Further, as he had studied a large sample of Asian countries, he tried to minimise the country-specific heterogeneity by imposing two-way dummies, i.e., in case of two-way fixed- and random-effect models by using time-country dummies. He has also checked the robustness of the results by analysing different models. However, by imposing dummies of
cultural aspects and religion he might have gotten more robust results, and an extended study in this area should incorporate these issues. There are studies which have found that cultural and religion aspects of a country have considerable impact on the economic growth on the respective countries (see, for example, Dieckmann 1996, Griffin 1999, Casson and Godley
2000, Marini 2004, Grier 1997, Blum and Dudley 2001 and Barro and McCleary 2003).
The results of his analysis show that FDI and exports enhance the growth of Asian countries and also that labour and capital help in that process. This implies that Asian countries that are moving ahead for globalization might choose to go ahead. However, when we analyzed the case of nonlinearity associated only with FDI, he found that this variable enhances growth. On the other hand, the investigation of the nonlinearity in both cases, i.e., exports and FDI, show a significant and positive impact of exports only on the economic growth of panel countries.
This suggests that to achieve a higher and higher growth path, moving ahead with exports is more feasible in Asian countries. This is true, particularly for countries that do not have sufficient resources to bring more advanced technology to private homes. The more advanced technology would create an attractive environment for FDI, but would also require an extensive investment for large improvements in the country’s infrastructure.
Further, there are studies that have found that FDI has a negative impact on economic growth and income distribution. Hence, he suggests an export-led growth path, particularly at the initial stage of growth, in the later period, dependence on FDI might be feasible option. This finding can be defended based on two arguments (see Afzal 2010). First, the exports promotion incentives determine a specialization of the economy accompanied by the scale benefices. Second, the augmented exports may stimulate the country to import high-value inputs, products and technologies. By consequence, these elements may have a positive impact on the productive capacity of the economy.
A.K.Tiwari(2011) conducted an empirical analysis in the framework of a panel for 23 Asian countries by employing data from 1986 to 2008. He also incorporated a two-way effect model for the analysis, as the assumptions of fixed and random effects across countries and over time are extremely plausible. He also
examined nonlinearities associated with exports and FDI in the economic growth of Asian countries. Further, as he had studied a large sample of Asian countries, he tried to minimise the country-specific heterogeneity by imposing two-way dummies, i.e., in case of two-way fixed- and random-effect models by using time-country dummies. He has also checked the robustness of the results by analysing different models. However, by imposing dummies of
cultural aspects and religion he might have gotten more robust results, and an extended study in this area should incorporate these issues. There are studies which have found that cultural and religion aspects of a country have considerable impact on the economic growth on the respective countries (see, for example, Dieckmann 1996, Griffin 1999, Casson and Godley
2000, Marini 2004, Grier 1997, Blum and Dudley 2001 and Barro and McCleary 2003).
The results of his analysis show that FDI and exports enhance the growth of Asian countries and also that labour and capital help in that process. This implies that Asian countries that are moving ahead for globalization might choose to go ahead. However, when we analyzed the case of nonlinearity associated only with FDI, he found that this variable enhances growth. On the other hand, the investigation of the nonlinearity in both cases, i.e., exports and FDI, show a significant and positive impact of exports only on the economic growth of panel countries.
This suggests that to achieve a higher and higher growth path, moving ahead with exports is more feasible in Asian countries. This is true, particularly for countries that do not have sufficient resources to bring more advanced technology to private homes. The more advanced technology would create an attractive environment for FDI, but would also require an extensive investment for large improvements in the country’s infrastructure.
Further, there are studies that have found that FDI has a negative impact on economic growth and income distribution. Hence, he suggests an export-led growth path, particularly at the initial stage of growth, in the later period, dependence on FDI might be feasible option. This finding can be defended based on two arguments (see Afzal 2010). First, the exports promotion incentives determine a specialization of the economy accompanied by the scale benefices. Second, the augmented exports may stimulate the country to import high-value inputs, products and technologies. By consequence, these elements may have a positive impact on the productive capacity of the economy.
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