Foreign Direct Investment and Gross Domestic Investment: Evidence from Asean 5

Abstract

This paper is aiming to evaluate the impact of foreign direct investment (FDI) and gross domestic investment (GDI) on the growth rate of real gross domestic per capita of the founding members of ASEAN group namely Malaysia, Singapore, Thailand, Indonesia and Philippines. By following the neo classical cum neo-liberal theories, and the dependency theory, this study maintains that the economic growth rates as one of the best proxy to measure economic development for developing countries. Time-series analyses utilizing the Autoregressive Distributive Lag (ARDL) technique were employed. The results of the ECM-ARDL for long run analysis showed that most of the coefficients in the long run derived from Malaysia, Thailand, Singapore and Philippines are significant. These results are consistent with the Dependency, Neo-classical and neo-liberal theory. Other country in this study shows a mix evidence of relationship between their independent variables and the dependent variables.