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Foreign direct investment, economic freedom and economic growth: international evidence


Wan Ngah, Wan Azman Saini and Baharumshah, Ahmad Zubaidi and Law, Siong Hook (2010) Foreign direct investment, economic freedom and economic growth: international evidence. Economic Modelling, 27 (5). pp. 1079-1089. ISSN 0264-9993; ESSN: 1873-6122


In this paper, we investigate the systemic link between economic freedom, foreign direct investment (FDI) and economic growth in a panel of 85 countries. Our empirical results, based on the generalized method-of-moment system estimator, reveal that FDI by itself has no direct (positive) effect on output growth. Instead, the effect of FDI is contingent on the level of economic freedom in the host countries. This means the countries promote greater freedom of economic activities gain significantly from the presence of multinational corporations (MNCs).

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Additional Metadata

Item Type: Article
Divisions: Faculty of Economics and Management
DOI Number: https://doi.org/10.1016/j.econmod.2010.04.001
Publisher: Elsevier
Keywords: Foreign direct investment; Economic freedom; Economic growth; Absorptive capacity; Generalized method-of-moments; R&D spillovers
Depositing User: Nabilah Mustapa
Date Deposited: 15 Sep 2015 08:39
Last Modified: 15 Sep 2015 08:39
Altmetrics: http://www.altmetric.com/details.php?domain=psasir.upm.edu.my&doi=10.1016/j.econmod.2010.04.001
URI: http://psasir.upm.edu.my/id/eprint/40289
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