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Foreign Direct Investment, Domestic Investment and Economic Growth in China: A Time Series Analysis
Open accessAbstract
This paper investigates the causal link between foreign direct investment (FDI), domestic investment and economic growth in China for the period 1988–2003 using a multivariate VAR system with error correction model (ECM) and the innovation accounting (variance decomposition and impulse response function analysis) techniques. The results show that while there is a bi‐directional causality between domestic investment and economic growth, there is only a single‐directional causality from FDI to domestic investment and to economic growth. Rather than crowding out domestic investment, FDI is found to be complementary with domestic investment. Thus, FDI has not only assisted in overcoming shortage of capital, it has also stimulated economic growth through complementing domestic investment in China.
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Cited by
Sorted by citations
Dynamics of economic growth in ASEAN-5 countries: a panel ARDL approach
Hidthiir, M. H. B., Ahmad, Z., Junoh, M. Z. M., & Yusof, M. F. B. (2024) · Discover Sustainability · doi:10.1007/s43621-024-00351-x · Cited by 27
Metadata
- Authors
- Tang, S., Selvanathan, E. A., & Selvanathan, S.
- Affiliations
- Griffith University (AU)
- Venue
- The World Economy
- Publisher
- Wiley
- Published
- 2008-09-29
- Volume
- 31
- Issue
- 10
- Pages
- 1292-1309
- ISSN
- 0378-5920 (ISSN-L)
- 1467-9701
- OpenAlex
- W1597620085
- Cited by
- 236
- References
- 33
- Citations by year
- 2026: 3 · 2025: 11 · 2024: 13 · 2023: 11 · 2022: 8 · 2021: 25 · 2020: 22 · 2019: 18 · 2018: 20 · 2017: 13 · 2016: 14 · 2015: 7 · 2014: 19 · 2013: 17 · 2012: 18
- FWCI
- 17.25
- Type
- journal article
- Language
- en
- Open access
- bronze
- doi.org
- Locations
- World Economy (publishedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- Econstor (Econstor) (submittedVersion)
- Griffith Research Online (submittedVersion)
- Topics
- Social Sciences › Business, Management and Accounting › Strategy and Management › International Business and FDI
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Economic Growth and Productivity
- Social Sciences › Economics, Econometrics and Finance › General Economics, Econometrics and Finance › Monetary Policy and Economic Impact
- Keywords
- foreign direct investment, domestic investment, economic growth, FDI-growth causality, crowding out, capital shortage, China
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