Relationship Between Outward Foreign Direct Investment and Domestic Investment: Evidence from GCC Countries

Asian Economic and Financial Review

article

Farah Durani¹  Waqar Ameer²  Muhammad Saeed Meo³  Maizaitulaidawati Md Husin⁴ 

[1] College of Business Administration, University of Business and Technology;School of Economics and Trade, Hunan University;Department of Management Science, The Superior College;Azman Hashim International Business School, Universiti Teknologi Malaysia, Malaysia, University of Business and Technology

关键词: Outward FDI;    Domestic investment;    Endogeneity;    Panel data;    GCC.;   

DOI  :  10.18488/journal.aefr.2021.114.278.291

学科分类：社会科学、人文和艺术（综合）

来源: Asian Economic and Social Society

【 摘 要 】

This paper examines the relationship between outward foreign direct investment and domestic investment, which is regarded with increased interest as a driver of growth in domestic markets for Gulf Cooperation Council (GCC) economies. Mean group (MG), pooled mean group (PMG) and dynamic fixed effect (DFE) approaches have been applied to measure short-run and long-run effects of domestic investment (DI) on outward foreign direct investment (OFDI) by relaxing the assumption of cross-sectional dependence (CD). This research shows that ignoring cross-sectional dependency among the countries which are parallel in economic structure may result in biased economic estimations. The findings of the dynamic fixed effect estimators show that domestic investment has negative and significant effects on FDI outflows in the long run in GCC countries. Furthermore, some of macroeconomic variables (trade and inflation) have insignificant effects on OFDI, whereas human capital has positive and significant effects on FDI outflows in the long run. The findings of this research remain important for policy makers to determine the practical efficacy of market reforms steered towards boosting domestic investment and growth. Furthermore, the policies related to the development of human capital can also take guidance from this study.

【 授权许可】

CC BY