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Causality among Foreign Direct Investment and Economic Growth: ADirected Acyclic Graph Approach
Published online by Cambridge University Press: 26 January 2015
Abstract
With the aim of examining the causal structure between foreign directinvestment (FDI) and economic growth, this study derives inductive causalinference using the directed acyclic graph approach, which makes no a prioricausal assumptions. There are three major findings of this study. First,economic growth causes FDI inflows for developing countries, whereas FDIinduces economic growth for developed countries. Second, trade is animportant intermediary to facilitate the interaction between FDI and otherfactors. Third, the stock market is found to be an intermediary thatamplifies the influence on FDI from many causal variables of FDI fordeveloped countries.
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- Copyright © Southern Agricultural Economics Association 2013
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