OPENNESS AND ECONOMIC GROWTH: EMPIRICAL EVIDENCE ON THE RELATIONSHIP BETWEEN OUTPUT, INWARD FDI, AND TRADE

E.M. EKANAYAKE, RICHARD VOGEL, AND BALA VEERAMACHENENI


Abstract

The relationship between openness and economic growth in developed and developing countries has been of continuing interest in. both the theoretical and empirical literature. In this pape1; we employ a vector autoregressive (VAR) model and error correction techniques to test for the existence and nature of the causal relationship between output level, inward FDI and exports across a cross-section of both developed and developing countries using data from I 960-200I. Our main objective is to analyze the extent and sources of international linkages between openness and economic performance. The evidence for bi-directional causality between exports growth; economic growth and FDI are found to have mixed results

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Gibson D. Lewis
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