This research examines the relationship between foreign direct investment and economic growth of selected ASEAN nations, namely Myanmar, Singapore, Thailand, Malaysia, and Indonesia, over the study period from 1991 to 2013. In theoretical terms, the neoclassical growth and endogenous growth theories have been mainly applied to support this study. The different methods of Levin, Lin and Chu (LLC) (1992), Im, Pesaran and Shin (IPS) (1997), and Fisher-Type unit root tests were used to analyze our data set to determine whether they have a unit root or, if not, whether they are stationary. This resulted in some being stationary at the I(0) and some stationary at I(1). In addition, the Panel Granger Causality test was carried out and found that there is only one-way causality from Gross Domestic Product (GDP) to Foreign Direct Investment (FDI); the country’s economic prospects attract foreign direct investment inflows of the selected countries. Choosing the panel ARDL approach is proper for this study because it can analyze long-run and short-run dynamics even when the variables are a mix of stationary and non-stationary time series. Pooled Mean Group (PMG), Mean Group (MG) and traditional Dynamic Fixed-Effect Estimator (DFE) were used to forecast the short-run and long-run relationship between variables. As the PMG and DFE are efficient estimation methods according to the Hausman Test, we cannot conclude that foreign direct investment has a positive or negative impact on the economic growth in the long run as the results are not significant, but the FDI’s impact on GDP is positive in the short-run at the panel level. As the second of individual-level findings, FDI of Myanmar, Thailand, and Singapore has a favourable impact on the growth process of their economies except in Malaysia and Indonesia. Moreover, the trade openness impact is either positive or negative on GDP for Malaysia, while it shows negative in Myanmar. Furthermore, the effect of exchange is significantly negative on the economic performance of the country’s GDP of Thailand, Singapore, Malaysia, and Indonesia.

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Phyoe, E. E. (2015). The Relationship between foreign Direct investment and economic growth of selected ASEAN Countries. International Journal of Business and Administrative Studies, 1(4), 132-146.