The crowding effects of foreign direct investment on domestic investment: Evidence from Asia
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This paper intends to investigate the impacts and consequences of the inflow of Foreign Direct Investment (FDI) on Domestic Investment (DI) by the occurrence of the financial crisis (before, during and after Asia financial crisis) in Asia. The data were collected from 1993 to 2001 and separated into three sub-periods of 1993-1995 (Before Asia Financial Crisis), 1996-1998 (During Asia Financial Crisis) and 1999-2001 (After Asia Financial Crisis), consisting of 38 Asian countries. In this paper, we estimated the data using the balanced panel data of Fixed Effects (FE) and Random Effects (RE) estimators with the existence of Instrumental Variables (IV). The general empirical finding found that FDI has crowded out (negative) effect on DI for all sub-periods where sub-periods during and after the Asia financial crisis showed significant results. Thus, this study concludes that the inflow of FDI is not statistically significant and harmful for DI before the Asia financial crisis. However, the impact of FDI is significant but negatively correlated with DI for the case of during and after the Asia financial crisis. Therefore, this study reveals that different economic conditions influence the inconsistent significance or not significant impact of FDI on DI in Asian countries.
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How to Cite
Budang, N. A. B. & Hakim, T. A.. (2019). The crowding effects of foreign direct investment on domestic investment: Evidence from Asia. International Journal of Business and Economic Development, Volume 07 Issue 02.
Citation Context
APA
Budang, N. A. B. & Hakim, T. A.. (2019). The crowding effects of foreign direct investment on domestic investment: Evidence from Asia. International Journal of Business and Economic Development, Volume 07 Issue 02.
MLA
Budang, Nurul Azwanie Binti, and Taufik Abd Hakim. "The crowding effects of foreign direct investment on domestic investment: Evidence from Asia." International Journal of Business and Economic Development, Volume 07 Issue 02, 2019.
Chicago
Nurul Azwanie Binti Budang and Taufik Abd Hakim. "The crowding effects of foreign direct investment on domestic investment: Evidence from Asia." International Journal of Business and Economic Development Volume 07 Issue 02 (23 Oct 2019).
Harvard
Budang, N. A. B. & Hakim, T. A. (2019) The crowding effects of foreign direct investment on domestic investment: Evidence from Asia. International Journal of Business and Economic Development, Volume 07 Issue 02
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