PANEL DATA ANALYSIS OF FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN DEVELOPING COUNTRIES; POLICY IMPLICATION FOR NEPAL
PANEL DATA ANALYSIS OF FOREIGN DIRECT INVESTMENT AND ECONOMIC GROWTH IN DEVELOPING COUNTRIES; POLICY IMPLICATION FOR NEPAL

Summary/Abstract: Foreign direct investment (FDI) has increased rapidly in developing countries since the 1990s. Many studies found that there is a significant relationship between FDI and economic growth. This thesis seeks to analyze the relationship between FDI and economic growth in developing countries and explore policy implications for the South Asian countries and Nepal. The study conducts panel data analyses based on a panel data set of 63 developing countries in Asia, Africa, and Latin America for the period from 1990-2015. The results of the panel data analyses, obtained by the fixed effects, random effects, difference generalized method of moment, DGMM and system generalized method of moment, SGMM estimators, show that there is a significant positive effect of FDI on economic growth. It is also found that the FDI-economic growth relationship depends on domestic macroeconomic and financial market conditions, domestic investment climate and infrastructure in host countries.

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