FDI, Exports, and Growth in East and Southeast Asia --Evidence from Time-Series and Panel Data Causality Analyses

of the Paper: Using time-series and panel data from 1986 to 2004, this paper examines the Granger causality relations between GDP, exports, and FDI among China, Korea, Taiwan, Hong Kong, Singapore, Malaysia, Philippines, and Thailand, the eight rapidly developing East and Southeast Asian economies. After reviewing the current literature and testing the properties of individual time-series data, we estimate the VAR and VECM of the three variables to find various Granger causal relations for each of the eight economies. We then construct the panel data of the three variables for the eight economies as a group and then use the fixed effects and random effects approaches to estimate the panel data VAR equations for Granger causality tests. The panel data causality results reveal that FDI has unidirectional effects on GDP directly and indirectly through exports, and there also exists bidirectional causality between exports and GDP for the group. Economic implications of our analysis are then explored in the conclusions.