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A Study on the Relationship between Foreign Direct Investment and the Absorptive Capacity of a Host Country Using Panel Threshold Regression

패널문턱회귀를 활용한 외국인 직접투자와 현지국 흡수능력의 관계 연구

  • Cao, Thu Trang (Department of International Trade, Kyung Hee University) ;
  • Ji-Young Hwang (Department of International Trade, Kyung Hee University) ;
  • Yun-Seop Hwang (Department of International Trade, Kyung Hee University) ;
  • Cheon Yu (Department of International Trade, Mokpo National University)
  • Received : 2022.07.20
  • Accepted : 2022.08.29
  • Published : 2022.08.30
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Abstract

This study is designed to investigate the effect of inflow FDI on the host country's economic growth and the role of absorptive capacity in this relationship. Eight developing countries in East Asia, including Mongolia, Indonesia, Malaysia, Myanmar, the Philippines, Thailand, Vietnam, and Cambodia, are analyzed. Year data from 2000 to 2018 are used. Based on the study of Hansen (1999), the panel threshold effect model is used, and human capital, R&D, and infrastructure are set as absorptive capacity by referring to Wang and Hwang (2013). The analysis results are as follows. It is confirmed that FDI has a positive effect on the economic growth of the host country, and absorption capacity strengthens the relationship between FDI and economic growth in a positive direction. At this time, it appears that a threshold exists for the moderating effect of the absorptive capacity. It presents useful implications for economic growth in developing countries.

Keywords

Acknowledgement

This work was supported by the Ministry of Education of the Republic of Korea and the National Research Foundation of Korea (NRF-2020S1A5A2A01044259)

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