Othman, N., Andaman, G., Yusop, Z. and Ismail, M. M.
Pertanika Journal of Social Science and Humanities, Volume 26, Issue 2, June 2018
Keywords: FDI inflows, Government expenditures, Pooled Means Group, Market Size
Published on: 29 Jun 2018
This paper uses Pesaran et al.'s (1999) Pooled Means Group (PMG) estimation to explore the role of government expenditures of the host countries on Foreign Direct Investment (FDI) inflows. The PMG estimator allows for a greater degree of parameter heterogeneity by imposing common long-run relationships across countries. A panel data from 24 developing countries was utilised for the study period between 1982 and 2014. The empirical results show government expenditure significantly promotes FDI inflows in the long-term. The results also suggest that market size plays an important role in FDI inflows.
ISSN 0128-7702
e-ISSN 2231-8534
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