Foreign Direct Investment and Economic Growth in Southeast Asia Countries: A Panel Data Regression Analysis
Al Muizzuddin Fazaalloh
Brawijaya University
Abstract
This paper examines the effect of foreign direct investment (FDI) to economic growth and domestic investment in 6 Southeast Asia countries (Indonesia, Thailand, Malaysia, Brunei Darussalam, Philippines, and Laos) over the period 2000-2017. Using panel data regression analysis with panels corrected standard errors (PCSEs) approach, we find that FDI has a significant positive effect on economic growth. In addition, the interaction effect of FDI and education shows a significant negative effect. Meanwhile, the interaction effect of FDI and financial development indicates an insignificant effect. These results imply that education and financial development may not be a good channel for FDI in boosting economic growth.
Keywords: FDI, economic growth, Southeast Asia, panel data regression
Topic: Economics