Expectations and the Dynamic Feedback between Foreign Direct Investment and Economic Growth

Authors

Diego Escobari, The University of Texas Rio Grande ValleyFollow
Diego E. Vacaflores

Document Type

Article

Publication Date

2015

Abstract

This paper seeks to analyze the dynamic feedback between Foreign Direct Investment (FDI) and economic growth – larger FDI promotes higher GDP, while higher GDP can be achieved with higher levels of FDI. We use panels and a sample of 19 Latin American countries to estimate a dynamic FDI and a dynamic GDP equation that jointly characterize the evolution of both variables. We find that the dynamics of GDP and FDI are mostly driven by the expectations. Shocks of GDP or FDI were found to play no role affecting the dynamics.

Comments

Original published version available at https://doi.org/10.1080/10168737.2014.966740

https://www.tandfonline.com/share/AVKUHKCN6PAPWWBVIGEV?target=10.1080/10168737.2014.966740

Recommended Citation

Diego Escobari & Diego E. Vacaflores (2015) Expectations and the Dynamic Feedback between Foreign Direct Investment and Economic Growth, International Economic Journal, 29:1, 121-136, DOI: 10.1080/10168737.2014.966740

Publication Title

International Economic Journal

DOI

10.1080/10168737.2014.966740