TY - JOUR
T1 - Foreign Direct Investment and Private Domestic Investment
T2 - Does Institutional Quality Matter?
AU - Handoyo, Rossanto Dwi
AU - Ibrahim, Kabiru Hannafi
AU - Wardana, Wahyu Wisnu
AU - Sari, Nina Wulan
AU - Lapipi,
N1 - Publisher Copyright:
© Author(s).
PY - 2024/4
Y1 - 2024/4
N2 - Using a two-step system generalized method of moment (SGMM) this study explored the role of institutional quality while analyzing the links between foreign direct investment (FDI) and domestic investment (DI) in 21 Asian developing and emerging countries from 2011 to 2016. Our empirical strategy indicates that the crowds-out and crowds-in effect of FDI on domestic investment depends on the chosen dependent variable. Using domestic private investment (DPI) as the dependent variable, the study confirms the crowding-out effects of FDI on domestic investment. Conversely, utilizing the gross fixed capital formation (GFCF) findings show that the FDI crowds in the domestic investment. It is also revealed that institutional quality matters in determining such nexus. The study further recommends the need to augment the positive role of institutional quality in such a way that the crowding-out effect of the concurrent increase in FDI and institutional quality will augur well for domestic investment.
AB - Using a two-step system generalized method of moment (SGMM) this study explored the role of institutional quality while analyzing the links between foreign direct investment (FDI) and domestic investment (DI) in 21 Asian developing and emerging countries from 2011 to 2016. Our empirical strategy indicates that the crowds-out and crowds-in effect of FDI on domestic investment depends on the chosen dependent variable. Using domestic private investment (DPI) as the dependent variable, the study confirms the crowding-out effects of FDI on domestic investment. Conversely, utilizing the gross fixed capital formation (GFCF) findings show that the FDI crowds in the domestic investment. It is also revealed that institutional quality matters in determining such nexus. The study further recommends the need to augment the positive role of institutional quality in such a way that the crowding-out effect of the concurrent increase in FDI and institutional quality will augur well for domestic investment.
KW - Domestic Private Investment
KW - Foreign Direct Investment
KW - Institutional Quality
KW - Two-step System Generalized Method of Moment (SGMM)
UR - http://www.scopus.com/inward/record.url?scp=85191726304&partnerID=8YFLogxK
U2 - 10.22059/ier.2024.337199.1007365
DO - 10.22059/ier.2024.337199.1007365
M3 - Article
AN - SCOPUS:85191726304
SN - 1026-6542
VL - 28
SP - 220
EP - 237
JO - Iranian Economic Review
JF - Iranian Economic Review
IS - 1
ER -