Working Paper # 08/07
Abstract
This paper tests the endogenous relationship between FDI growth and economic growth using
a panel dataset for 23 OECD countries for the period 1975-2004. In particular we estimate a
two-equation simultaneous equation system with the generalized methods of moments
(GMM) that treats economic growth and FDI growth as endogenous variables. We find that
FDI growth and economic growth are significant determinants of each other. We also find
that export growth rate and human capital are statistically significant determinants of both
FDI growth and economic growth. Our findings lead us to conclude that FDI growth and
economic growth have an endogenous relationship.
Keywords: FDI growth, economic growth, Panel Data, GMM
JEL Classification: C33, O5, F21.
Burcu TÜRKCAN1
Izmir University of Economics
Research Assistant
Sakarya Cad. No:156 Balçova/Izmir - TURKEY
I. Hakan YETKiNER
Izmir University of Economics
Assoc. Prof. Dr.
Sakarya Cad. No:156 Balçova/Izmir - TURKEY
Hakan.Y [email protected]
t Corresponding Author.
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