DETERMINANTS OF INWARD FDI IN MONGOLIA: AN APPLICATION OF THE ARDL BOUNDS TESTING APPROACH TO COINTEGRATION
Journal Title: Asian Economic and Financial Review - Year 2017, Vol 7, Issue 3
Abstract
The study at hand is the first of its kind that aimed to provide a comprehensive analysis of the determinants of foreign direct investment (FDI) in Mongolia by analyzing their short-run, long-run, and Granger causal relationships. In doing so, we methodically used a series of econometric methods to ensure reliable and robust estimation results that included the augmented Dickey-Fuller and Phillips-Perron unit root tests, the most recently advanced autoregressive distributed lag (ARDL) bounds testing approach to cointegration, fully modified ordinary least squares, and the Granger causality test within the vector error-correction model (VECM) framework. Our findings revealed domestic market size and human capital to have a U-shaped relationship with FDI inflows, with an initial positive impact on FDI in the short-run, which then turns negative in the long-run. Macroeconomic instability was found to deter FDI inflows in the long-run. In terms of the impact of trade on FDI, imports were found to have a complementary relationship with FDI; while exports and FDI were found to be substitutes in the short-run. Financial development was also found to induce a deterring effect on FDI inflows in both the short- and long-run; thereby also revealing a substitutive relationship between the two. Infrastructure level was not found to have a significant impact on FDI on any conventional level, in either the short- or long-run. Furthermore, the results have exhibited significant Granger causal relationships between the variables; thereby, ultimately stressing the significance of policy choice in not only attracting FDI inflows, but also in translating their positive spill-over benefits into long-run economic growth.
Authors and Affiliations
Maralgua Och*| Graduate Institute of National Development, National Taiwan University, Taiwan (ROC), Christian Baerbig| Procurement - Global Business Services, Covestro Deutschland AG, Leverkusen, Germany, Tsolmon Jadamba| No. 210, building 16/2, Khasbaatar street, Ulaanbaatar, Mongolia
Keywords
Related Articles
- EP ID EP2343
- DOI -
- Views 541
- Downloads 47
EMERGING STOCK PREMIA: SOME EVIDENCE FROM INDUSTRIAL STOCK MARKET DATA
This paper studies the behavior of emerging stock excess returns in an industry-by-industry context. We examine stock market performance for 23 countries and ten industries over 17 years from 1995 to 2012 – a period that...
DOES BANKING SECTOR REFORM BUY EFFICIENCY OF BANKING SECTOR OPERATIONS? – EVIDENCE FROM RECENT NIGERIA’S BANKING SECTOR REFORMS
There is a growing concern associated with the recent banking sector reform on whether it achieved its purpose of making banks efficient or not. Several studies have had several opinions with respect to the real impacts...
SUSTAINABLE GROWTH AND FIRM RISK FROM THE SIGNALING PERSPECTIVE
This study attempts to examine the relevance of sustainable growth and its influence on firm’ financial and business risks and Compare the relative information content of them. Based on sampling, 85 firms from Tehran Sto...
THE LONG RUN AND SHORT RUN IMPACTS OF FOREIGN DIRECT INVESTMENT AND EXPORT ON ECONOMIC GROWTH OF VIETNAM
The determinants of economic growth have always been an important issue in economic research. This paper aims to study the short run and long run impact of foreign direct investment (FDI) and export on economic growth of...
WHY SOUTH-SOUTH FDI IS BOOMING: CASE STUDY OF CHINA FDI IN NIGERIA
As economic linkage between south-south countries especially China with Nigeria have grown in intensity, it is seen as an engine to Nigeria economic growth. Therefore the amplified presence of China investment in Nigeria...