Foreign Direct Investment and Economic Growth: Does Gross Fiscal Formation and Trade Openness Matter?
DOI:
https://doi.org/10.62019/abcief.v1i1.16Keywords:
Openness, capital formation, economic growth, ASEANAbstract
The currents study has examined the relationship between foreign direct invest and economic growth. In addition to that the study has also examined the role of gross fixed capital formation in fostering economic growth. The study has used the data of 28 years from the period starting from 1991 to 2018. In the study, panel data estimates were used, and the most reliable results from the diagnostic test came from the fixed effect model. The technique of estimate based on panel data is the one that works well for this kind of inquiry. Panel data is desirable because it can account for and even minimize individual variation, providing lower collinearity across variables and more degrees of freedom, as well as uncover and quantify consequences. Panel data is also advantageous since it can discover and quantify causes. At the 95% confidence level, the panel unit root test reveals that all variables are stationary. This conclusion is based on the results of the test. A supplemental estimate may be obtained through the use of the fixed effects model. All of the variables that were put through their paces were found to be stable and significant at the 5% level of significance. If the Hausman test is carried out, it is generally agreed that the model with fixed effects is superior to the model with random effects, which is its counterpart. According to the results of the model with fixed effects, every variable has a significant and favorable association with GDP. A rise in foreign direct investment (FDI) is correlated with an increase in commercial activity and the formation of more stable forms of capital, both of which may drive GDP growth. GDP may be increased by a variety of means, including gross fixed capital creation, foreign direct investment, and openness; hence, each of these may also contribute to economic growth. It has been shown that there is a positive correlation between each model variable and GDP.
Downloads
Published
Issue
Section
License

This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Copyright and Licensing
Authors shall retain the copyrights to the article. Author(s) grant ABCIEF an irrevocable, non-exclusive license to publish the article electronically and in print format, and to identify itself as the original publisher. Author(s) can grant any third party the right to use the article freely as long as its original authors and citation details are identified. The article is distributed under the Creative Commons Attribution 4.0 License. Unless otherwise stated, associated published material shall be distributed under the same license.
You are free to:
- Share —copy and redistribute the material in any medium or format
- Adapt —remix, transform, and build upon the material for any purpose, even commercially.
Under the following conditions:
- Attribution —You must give appropriate credit, provide a link to the license, and clearly indicate if any changes were made. You may do so in any reasonable manner, but not in any way that suggests the licenser endorses you or your use.
- No additional restrictions — You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.