Abstract
This paper investigates whether the impacts of trade and foreign direct investment (FDI) on domestic investment depend upon social capability of a country. Applying the instrumental variable threshold regressions approach to cross-sectional data for 85 countries, it finds that social capability such as human capital, financial development, and political institutions defines the impacts of trade and FDI on domestic investment. Particularly, trade adversely affects investment in low-human-capital, less-financially-developed, or more-corrupted countries, but positively affects it in countries with opposite attributes. In contrast, FDI has a positive effect on investment in countries with low human capital, less-developed financial sectors, or high corruption, but a negative impact in countries with opposite attributes.
| Original language | English |
|---|---|
| Pages (from-to) | 56-69 |
| Number of pages | 14 |
| Journal | International Review of Economics and Finance |
| Volume | 26 |
| DOIs | |
| Publication status | Published - 2013 Apr 1 |
| Externally published | Yes |
Fingerprint
Keywords
- Foreign direct investment
- Instrumental variable threshold regressions
- Investment
- Social capability
- Trade openness
ASJC Scopus subject areas
- Economics and Econometrics
- Finance
Cite this
Investment, trade openness and foreign direct investment : Social capability matters. / Kim, Dong-Hyeon; Lin, Shu Chin; Suen, Yu Bo.
In: International Review of Economics and Finance, Vol. 26, 01.04.2013, p. 56-69.Research output: Contribution to journal › Article
}
TY - JOUR
T1 - Investment, trade openness and foreign direct investment
T2 - Social capability matters
AU - Kim, Dong-Hyeon
AU - Lin, Shu Chin
AU - Suen, Yu Bo
PY - 2013/4/1
Y1 - 2013/4/1
N2 - This paper investigates whether the impacts of trade and foreign direct investment (FDI) on domestic investment depend upon social capability of a country. Applying the instrumental variable threshold regressions approach to cross-sectional data for 85 countries, it finds that social capability such as human capital, financial development, and political institutions defines the impacts of trade and FDI on domestic investment. Particularly, trade adversely affects investment in low-human-capital, less-financially-developed, or more-corrupted countries, but positively affects it in countries with opposite attributes. In contrast, FDI has a positive effect on investment in countries with low human capital, less-developed financial sectors, or high corruption, but a negative impact in countries with opposite attributes.
AB - This paper investigates whether the impacts of trade and foreign direct investment (FDI) on domestic investment depend upon social capability of a country. Applying the instrumental variable threshold regressions approach to cross-sectional data for 85 countries, it finds that social capability such as human capital, financial development, and political institutions defines the impacts of trade and FDI on domestic investment. Particularly, trade adversely affects investment in low-human-capital, less-financially-developed, or more-corrupted countries, but positively affects it in countries with opposite attributes. In contrast, FDI has a positive effect on investment in countries with low human capital, less-developed financial sectors, or high corruption, but a negative impact in countries with opposite attributes.
KW - Foreign direct investment
KW - Instrumental variable threshold regressions
KW - Investment
KW - Social capability
KW - Trade openness
UR - http://www.scopus.com/inward/record.url?scp=84872015413&partnerID=8YFLogxK
UR - http://www.scopus.com/inward/citedby.url?scp=84872015413&partnerID=8YFLogxK
U2 - 10.1016/j.iref.2012.08.008
DO - 10.1016/j.iref.2012.08.008
M3 - Article
AN - SCOPUS:84872015413
VL - 26
SP - 56
EP - 69
JO - International Review of Economics and Finance
JF - International Review of Economics and Finance
SN - 1059-0560
ER -